The actual worth of a salary is relativistic. Raising the minimum wage for the country, but not raising the wages of those in higher income brackets would place more people within the same income bracket. The goods that are in that price range suddenly have a huge influx of people that want to/can buy it. Increased demand tends to drive up prices, leading to more inflation. Once inflation catches up, a lot of people just got knocked down lower than they were before, and it's not the rich people that were supposed to be brought down, it's the people who's financial space is being invaded by those who were just below them. If inflation were to be controlled as well, more people would be buying it. But this means supply gets more strained, and eventually would lead to running out of said product, unless it were rationed. I suppose you could produce more of said product, but even production would eventually peak, and such changes to the system would mean we approach that limit faster.
However, if the wage hike is increased only in one area, then they would have more relativistic buying power compared to people who did not receive a wage hike. The result is that it is easier for Americans to buy foreign goods, but harder to buy domestic goods. Because companies would be able to sell more product or service if it is produced cheaper, this would lead to outsourcing, meaning fewer jobs at home and fewer people earning that higher minimum wage.
However, this means that the poorest in the USA would be on higher ground relative to others around the world. The result is that it would be harder for anyone, even americans, to buy the relatively expensive American-made goods (assuming the price goes up), and easier for Americans to buy the relatively cheaper foreign-made goods. Both of these factors point in the same direction, and that direction is outsourcing. Companies exist to make money. Those that don't will not survive in such a cutthroat business world. So they will calculate the ideal balance of selling to more people, while milking those people for everything they can get for their product/service. This means moving production to a lower cost area. However, if too much production is moved away fro the USA, they could lose out on that customer base almost completely because they would have no money left. The latter fact, combined with the relatively high population of the USA means that this would stabilize eventually, what with them not wanting to lose such a huge customer base forever, but will also leave most of the Americans in a lower position than when it began. Meanwhile, the places where the companies now operate are relatively stronger than before.
Also, a company paying it's employees more money, which would under ideal circumstances be 100% recycled back into the company does not mean that company makes that much more money. If a car manufacturer gives their employees each $16000 so that they could buy cars from the company, the company does not make $16000 dollars per employee. What is actually happening is that they jut gave each of their employees a free car. The actual benefits (if any) and less tangible, like improved morale. it's difficult to say how much benefit they get from it, but economic entropy says that it can't be more than breaking even without some outside factors coming into play. Competition is a two-way street; if companies are to be allowed to compete, then workers must be allowed to do the same.
In short, there are other problems that need to be addressed before we try to overhaul the system. The fact that available labor, production, supply, and resources are finite all come to mind. There's also the fact that trying to organize larger groups of people all at once tends to lead to disaster and very painful inefficiency. How do you expect a small group of people to treat a mass of millions or billions of people like individuals instead of lumping them into general groups? People are tribal by nature, and large-scale societies are very touchy and hard to balance manually. You can gain a few things if the people directing all of it are doing it properly, but the complexity of the job and that some unsavory types get into power, leads me to support the philosophy "the less the government has to do, the better". Until certain material, and especially societal problems are addressed, I will err on the side of localized authority for most things.
But I'm starting to get off on a tangent. Though I feel it is important in understanding my position on the issue, I have stated it before in other threads and don't want to clutter this one up too much with it.
Also, apparently ctrl+i does italics. Fascinating.
Author
Topic: Minimum Wage (Read 10010 times)