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Much more to it than minimum wage increases. The Fed targets 2% inflation, the rest is mostly deficit spending by the House.
Chart (th.bing.com)
Costs can’t increase if wages stay the same.
Products need consumers, you can’t sell gas for $5/gal or charge $1500/mo rent if the average household is earning $200/year
I agree there are lots of factors behind inflation, but a legal minimum wage is the essential driver that allows it to happen
Costs can’t increase if wages stay the same.
Material costs, property taxes, fuel/electricity costs, insurance, maintenance, etc can increase while wages remain stable. The product cost goes up, by wages don't. In addition, inflation impacting the purchasing power of the dollar drives prices up across the board. All the money spent by Govt beyond taxes collected (deficit spending) increases the dollars in circulation, driving prices up - more money chasing the same number of available product. If the company buys product from other countries the exchange rate can fluctuate driving cost in USD up or down.
Wages are generally a response to higher costs and not the driver, though over time a feedback loop can make wages a bigger component of inflation. Artificially increasing minimum wage is not a natural thing and can help to drive price inflation in low wage reliant products - fast food, gas stations, merchandisers, etc. CA's increase from $17.50 to $22.50 is around a 30% increase and would need to be passed onto the customer, thus inflating restaurant pricing.
Product need consumers, you can’t sell gas for $5/gal if the average household is earning $200/year
Yes, if the end customer price increases enough, the lower income folks will find alternatives or do without. If the price increases too much, more people find alternatives or do without, the business sells much less product, further driving their prices higher to cover their fixed costs and cutting back on employees. It gets ugly and can become self reinforcing like during the depression.
The product cost goes up, by wages don't.
Not accurate. There are states with higher minimum wages than the National minimum wage. All of them have higher costs of living than states that only enforce the federal wage.
Consumer costs cannot increase if people cannot afford to pay more
Yes, if the end customer price increases enough, the lower income folks will find alternatives or do without.
Nope. McDonald’s would go out of business if they became too expensive for minimum wage earners to afford to eat there. Thousands of suppliers would go out of business if McDonald’s went out of business or couldn’t afford to buy their product. Oil companies would go out of business if thousands of suppliers no longer needed to produce their food.
This is billions, maybe trillions of dollars worth of enterprise that must keep their costs affordable in order to exist, and that’s just starting with one single corporation.
Inflation cannot exist [edit: beyond a certain extent, which we’re well past] if the end consumer cannot afford the increasing prices, and it flows all the way to the root of every supply/cost chain.
If there were no legal minimum wage, low-skill laborers would still be earning $0.10/hr and an iPhone would cost $9. It wouldn’t benefit Apple to produce a product so expensive that 90% of consumers couldn’t afford it, and it wouldn’t benefit apple’s suppliers to produce components so expensive that Apple couldn’t afford them, and so on ad infinitum. A phone is only allowed to cost $1200 because minimum wage laws make that a reasonable amount for a common luxury expense
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