Posted by bad_luck on 5/1/2014 4:18:00 PM (view original):
Please stop trying to explain economics. You think the federal government can reduce its deficit by selling more treasury bonds.
That's hardly a response. Mike's post is entirely reasonable.
Any regulation, tax, fee, act of God, etc. has consequences. Forcing employers to pay more for labor puts pressure on
profit. Those who go into business do so in the hopes that their profit exceeds the amount they would make if they invested - risked - their money elsewhere. Absorbing the cost is not a realistic option if there is an opportunity to do better by taking another action. A company can:
1. Raise prices of its product or service to maintain the required return on their investment
2. Reduce the cost of providing the product or service to maintain the required return on their investment. (through fewer jobs)
3. Some combination thereof.
4. Choose the opportunity of eliminating their investment in the affected enterprise and investing in something different.
Every one of these options ultimately doesn't squeeze the big guy, as minimum wage advocates intend, but instead end up indirectly hurting the very people they are "trying to help". Increased prices, job losses (check the CBO February 2014 estimate of job loss related to minimum wage hike), or companies moving out (more job losses) all affect those who work these positions.
If you don't consider context and ramifications of change, you'll never see how this stuff works.
By the way raising taxes on "the rich" or "corporations" exerts the same type of pressure, which is why targeted tax hikes on whoever makes more than me don't accomplish what their advocates publicly claim (but most privately don't believe).