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Maybe I missed it but he apparently left out the fact that as corporations and even some smaller businesses shrink their workforces through natural attritrion, mergers and lay-offs there are less people doing more work in some instances. That naturally leads to increased 'productivity'. If history is a guide, the newly raised minimum wage, when it kicks in, will probably shrink the lower paid end of the workforce a bit (although, some low-end employees receiving the new minimum wage will be promoted to more responsible positions to justify their mandated increased pay) and further increase productivity as employers will let some minimum wage employees go.Then, fewer workers will be required to do more work for a tiny (if any) raise in pay
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While I don't pretend to be an expert on economics
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Ahhhh.... very nice. You get it.
An increase in the minimum wage will ultimately result in less employment at the minimum wage level as employers will cut underperforming, and newly cost inefficient employees...
While those opposed to a hike in the minimum wage say that it will lead to rampant inflation... they are wrong because of the competition from the big box stores which already pay well above the Federal minimum wage. These stores will not have to change their practices, but rather the "mom and pop" stores will be forced to eat the impact on margins, or risk being non-competitive with their better capitalized and more efficient competition.
Those who are in favor of minimum wage hikes are generally wrong because while they try to use the dynamics of higher wages, they fail to recognize that a U-Scan doesn't get a paycheck... They also fail to recognize that wages are not the only form of compensation. If you mandate a rise in the wage, the employer can just as easily take the difference out of benefits (if you ever worked in a restaurant, think about the "employee meal" that you took for granted... if that is a $5 meal, and it is taken away, you've effectively lost 63 cents per hour of compensation for an 8 hour shift).
More for less... you produce more goods with less man hours. Productivity gains are often at their best as the economy takes a downturn and through its early recovery, and layoffs and low capacity utilization allow for investments in efficiency to take hold and newly found synergies as a result of acquisitions and mergers and other consolidations cut through the bureaucratic redundancies, which allow for better margins and better return on capital...
As the economy/industry recover... the new highly productive firm expands their production capacity through overtime, outsourcing, adding shift work, and maximizing shift work...
This is done using existing machinery on existing floorspace... it is only after all of these are exhausted, does the company resort to expansion plans of increased floorspace and increased machinery.
This is extremely important to our business cycle and has become increasingly evident as to its effects. This is exactly why employment figures are a lagging indicator, and why the "jobless recovery" that we kept hearing about in 2003 and early 2004 turned into 4.6% employment that the Fed WAS worried might spawn future inflation.
As productivity increases... as logistics continue to improve... as world trade continues to prosper, expect this not to be the anomaly, but the rule.