I was pondering the idea of a $100 minimum wage and had a question. If the minimum wage was $100 wouldn't prices just rise, even though a price floor on a supply and demand curve would claim that workers who currently make over $100 would be the only ones to keep their jobs? Now, I am infering that there would be no underground economy in this scenario where people could work under the table. To me it would seem that people would just raise their prices and keep their employees. If the minimum wage were $100 would there really be no cooks, cashiers, barbers, construction workers, and even most lawyers? So, if these occupations still existed in an economy with a $100 minimum wage and prices just went up, then why wouldn't that happen from a $1 increase?
double post.
I think that, while this would have a different sort of affect, that in the end you'd probably have similar results.
Why so?
I'm also sure that you could do a lot of interesting things with expectations here too.
I think you're probably right. So many variables, so many possibilities; it is for this reason I think computer simulation might provide a lot more insight when probing into the subtler issues of an economic model. Keeping so many variables in mind at once makes the purely deductive method intractible without the aid of modern technological tools.
a 10 cent minimum wage will not increase unemployment it will be totally ineffective and not do anything except create jobs for bureaucrats. the only impact of a minimum wage is to increase unemployment (if the minimum wage is higher than the market price of the job in question), to slightly increase wages for high skilled workers (by reducing their competition from unskilled workers) and to employ bureaucrats who enforce this regulation.
... just as the State has no money of its own, so it has no power of its own - Albert Jay Nock
("a squilion doller MW will create unemployment, therefore a 10 cent MW will do so too")
This is not the claim. The claim is that a million dollar/hr. minimum wage will increase unemployment, therefore, raising the minimum wage must at some point between its current level and $1M/hr. increase unemployment! Furthermore, this claim is a priori, so we don't have to "test" it to see if it's true. We already know it's true. Thus, we can use it to draw other conclusions, when appropriate. Finally, while we acknowledge that a vanishingly small increase in MW, such as a few cents, will have no real impact on unemployment, the fact is that MW-increase proponents don't know at what point it does begin to have an impact. Finally, due to the very confounding factors that have already been mentioned, we can't know precisely what this level is, but we can speculate that it is actually fairly small as the gradations between pay grades at the low end of the employment spectrum are as small as a few cents, so substitution effects are probably occurring even for very small changes in the MW.
Clayton -
And Rothbard's classic essay on this topic was just on LRC this week. You folks need to read that essay, comprehend it, then come back.
Also, please watch this, so we're not constantly talking past each other: