California Senate passes $13 minimum wage bill

[AggregateDemand]

I'm intrigued. Obviously minimum incomes are the best way to go, but it will be an interesting experiment, especially on a statewide level where it will be harder to avoid the minimum wage like it would be in Seattle.

Min wage is the worst way to go, and the Left's obsession with economic suicide can seemingly be explained by Freudian death wish. Raising minimum wages makes your labor force uncompetitive with other low-cost labor forces (in the US or outside of the US). Furthermore, governments that raise minimum wage abdicate their social responsibility and place it on private sector business. Private businesses are simplified mono-dimensional organizations that exist to maximize profit. They are not equipped or optimized to handle macro-socioeconomic problems.

If the government works to reduce the cost of labor to the private sector, employment and labor force will increase. Full employment will put upward pressure on wages to mitigate the cost of labor subsidization.

[AggregateDemand]

So do you suggest abolishing the minimum wage and establishing sweatshops to better compete with China?

Is the argument really so complicated that you are incapable of mustering a reasonable counterpoint? You are presumably a left-leaning voter. Did we get sweatshops when we implemented welfare, food stamps, unemployment, etc?

We can pay people $30,000 in federal/state benefits, or we can pay the same person $15,000 federal/state benefits, and let them earn the other $15,000 at a minimum wage job. We've chosen the former for a half-century, and we've received a permanent underclass for our efforts.

Granted, reform is difficult at the state level, but CA is already working towards the workfare arrangement via Medicaid expansion. Min wage is a silly counterproductive policy, aimed at assuaging land lords who complain that their tenants can't make rent.

[AggregateDemand]

Let's take a moment to discuss who actually makes the minimum wage.......

What you're proposing is to focus benefits narrowly, on a small number of workers, and focus the costs narrowly, on a small number of industries. From the outset, you're fighting an uphill battle against political economics, and the underlying motivation is probably just vindictive policy against retailers and fast food providers, both of whom are blamed for negative externalities, like outsourcing and obesity.

Minimum wage doesn't just affect the current min wage earners. It affects the entire pay scale. The cost multiplier creates cost-push inflation and reduces consumption. Also consider the budget and substitution effects. Do you think the automobile industry expected 20-somethings to swap new cars for $500 smartphones with $150 monthly service fees?

The choice is not min wage or no min wage. You're picking from a field of possible policies. If you choose to continue the existing policies by foiling against the absence of any action, you're just supporting the status quo.

[AggregateDemand]

I'm pretty sure the fact that you support any welfare programs at all (even ones with a work requirement) would get you kicked out of the Texas Republican Party.

Texas suppresses the cost of living by using high property tax rates to control median home values, and by supplying an abundance of lane-miles so people can sprawl. Texas prefers to suppress costs, though the state spends plenty of money subsidizing costs, like the generous abatement Plano granted to Toyota.

California can't raise property rates to keep median home prices in check, and they can't sprawl into the Pacific or the desert because the living conditions are less than optimal. We are talking about economics, not politics.

[AggregateDemand]

Well, we have to guess your positions. You complain about status quo, complain about everything, yet you don't propose any solution.

says every status-quo liberal who has ever lived.

If the policy question were "how do we keep the floors in Congress clean?", liberals would propose doubling the cleaning staff and supplies budget. Republicans would spend $200 bucks to put door mats and snow scrubs at every entry.

Republican solutions are often anti-climactic and indirect. They don't satisfy the liberal desire for pantomime, pomp, and circus; but that doesn't mean Republican policy directives are non-existent.

[AggregateDemand]

I tend to ignore your posts where you are 2+2=5 factually incorrect--there's just too many to respond to--but claiming that rising wages REDUCES consumption is too laughable to ignore.

Good point on the dangers of inflation. A leading problem needing tackled at this time in our history, right after getting rid of President Carter and dsico.

I didn't say it reduces aggregate consumption. I said it creates cost-push in the targeted industries, which reduces consumption (obviously within the industry experiencing cost push). The workers may be putting themselves out of work or cutting back their own hours.

Thanks for the nugget of wisdom about the lack of catastrophic inflation in housing, healthcare, education, and fuel. I'm sure the Federal Reserve Bank is manipulating the data to show that the California housing price index is 500% higher than it was in 1980.

http://research.stlouisfed.org/fred2/series/CASTHPI

[AggregateDemand]

Because of increases in the minimum wage?

Bizarre.....

At no point during this thread did I use minimum wage to explain increases in aggregate price level or aggregate consumption.

I said min wage could cause reduced consumption in the effected industries, which could ultimately reduce labor demand in the same industries. You inferred that I was talking about aggregate price level, which you attempted to rebut by citing lack of aggregate price level increases. Aggregate price level is utterly irrelevant, hence the existence of more specific price-indices. How you could confuse these unrelated discussions is beyond me.

[AggregateDemand]

A higher minimum wage raises peoples' incomes at a greater rate than it'd increase prices in affected industries.

You're establishing a wage floor. Income will rise for most workers. Some will lose their jobs, increasing the strain on the public welfare/unemployment entitlements. You're proliferating the current perverse system that pays people not to work, rather than paying them a subsidy to continue producing.

The entitlement paradigm is given a blanket endorsement under the false pretense that increasing wages will create greater aggregate demand in the economy, which will lead to hiring in other industries. It hasn't happened since the Oil Crisis and the rise of Japan. Instead, jobs are outsourced, and middle class income leaves the country as import spending rises.

How many more decades will this continue before the left-wing Keynesian rabble-rousers come to their senses?

Cost of labor to producers must go down. The Bush administration used deficit spending to put downward pressure on the dollar and export our price inflation to countries who buy dollars. Our ability to continue that arrangement has been severely impaired by the Great Recession. What do you want to do now? Suck harder on the Great Soceity status quo?