Re: Higher wages: bad for Wall Street, good for Main Street

[briand@xxxxxxxxxxx (Brian Carnell)]

On Thu, 9 May 1996 21:26:05 -0400, Charlotte Kates
<ckates@xxxxxxxxxxxx> wrote:


>According to David Rosenstein of Falls Church, Va., the
>controlling shareholder of 13 Popeye's Chicken and Biscuits
>stores, "This minimum wage increase is a bad idea." It's
>bad, he told Wall Street Journal staff reporter Bernard
>Wysocki Jr, because profits would decline 25 percent or more
>in some of his stores.
>
>Of course, what he's saying is what Karl Marx defined as the
>law of of capitalist economics -- that "profit rises in the
>same degree in which wages fall; it falls in the same degree
>in which wages rise."

Which is completely incorrect.  Or are you claiming that although
profits in business have risen since Marx wrote "Capital" that the
inflation adjusted wages of workers have decreased?

>But Popeye's makes a profit in all its stores, not just
>"some." And, in some, it already pays more than the proposed
>increase in the federal minimum wage from $4.25 to $5.15 an
>hour. While Popeye's pays less than $5 an hour in
>Philadelphia, the average pay is $6.01 in a more affluent
>area like Rockville, Md. where store managers say a higher
>minimum wage won't affect jobs, wages or profits. It's also
>the case in 11 states and the District of Columbia where the
>minimum wage is above the federal minimum.

Of course, what this person doesn't mention is that all increasing the
minimum wage will do is create a wage inflation effect across the
board.

Suppose McDonald's only starts at $4.25 but this Popeye's place starts
at $5/hour.  Assuming I get job offers from both, and all other things
are equal, my interest is in taking the job at Popeye's.  But now the
minimum wage increase comes along and McDonald's is forced to offer
$5/hour as well.  If Popeye's wants to maintain its competitive
advantage in wages it has to offer $5.75.  This sort of scene will be
replayed throughout the entire economy causing wage inflation, which
will also translate into price increases, which will translate into
general inflation, which after about 18 to 24 months will wipe out any
gains and then lead to people like this arguing for even higher
minimum wage increases.

>Of the three options Rosenstein says he has, one is ruled
>out -- accepting a lower profit.

Marxists never seem to realize the need for profit both to provide an
incentive for entrepreneurs *and* to provide for the creation of
capital.


>This ends the economics lesson for today -- a lesson that
>Communists should be teaching every day, whether in the
>shop, the community or anywhere else they meet people.

Yeah, I guess if you're going to Looney Tunes U. this could be
considered an economics lesson.

Of course the writer never comes out and says what a minimum wage
really is:  it's an invitation for employers to discriminate against
workers whose labor is not worth the minimum wage.  Low skilled
workers who might only be employable at less than the minimum wage are
discriminated against and left to unemployment by the minimum wage.

-----------------------------------------------------------------

Brian Carnell                   http://www.net-link.net/~briand/
briand@xxxxxxxxxxx


     --- from list marxism@xxxxxxxxxxxxxxxxxxxxxxxxxx ---