Comments on: Why “Livable Wage” Probably Equals “No Wage” http://www.thedigitaldiplomat.com/2006/07/26/why-livable-wage-probably-equals-no-wage/ Global security, governance, and economics in the digital era. By Justin Delabar. Wed, 07 Jan 2009 13:41:56 +0000 http://wordpress.org/?v=2.6.5 By: Michael Miller http://www.thedigitaldiplomat.com/2006/07/26/why-livable-wage-probably-equals-no-wage/#comment-52 Michael Miller Thu, 27 Jul 2006 07:52:01 +0000 http://www.thedigitaldiplomat.com/2006/07/26/why-livable-wage-probably-equals-no-wage/#comment-52 What "simple economics" causes them to employ fewer people. Yes, on the edges of Chicago they'll go outside the city, but in the middle of town they won't have that option. If they want that money, they'll have to pay more. Oh, it won't make a huge difference, and prices will go up at those certain stores, but to run a store they need the same number of people. Assume for a moment that they just increase prices in proportion so that their profit stays the same. This increase will not be (6.50 to 10 increase in labor) 50 percent because labor costs are not 50 percent of the cost of goods. The costs to consumer might increase 20 percent at most, for while labor is a big chunk, the original price of goods, the transportation costs, and the land and construction costs also count. So what this will do is a) shift some of the cost calculations such that workers get a larger share of the revenue b) give everyone the benefit of Walmart's efficiencies (supply chain, cheap goods, and cheap chinese labor) without sacrificing as many workers to it. Show me a study where a higher wage actually increased unemployment and I can be convinced otherwise. What “simple economics” causes them to employ fewer people. Yes, on the edges of Chicago they’ll go outside the city, but in the middle of town they won’t have that option. If they want that money, they’ll have to pay more. Oh, it won’t make a huge difference, and prices will go up at those certain stores, but to run a store they need the same number of people.

Assume for a moment that they just increase prices in proportion so that their profit stays the same. This increase will not be (6.50 to 10 increase in labor) 50 percent because labor costs are not 50 percent of the cost of goods. The costs to consumer might increase 20 percent at most, for while labor is a big chunk, the original price of goods, the transportation costs, and the land and construction costs also count. So what this will do is a) shift some of the cost calculations such that workers get a larger share of the revenue b) give everyone the benefit of Walmart’s efficiencies (supply chain, cheap goods, and cheap chinese labor) without sacrificing as many workers to it.

Show me a study where a higher wage actually increased unemployment and I can be convinced otherwise.

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