- Jul 29, 2001
And of course, sooner or later you will hear ?the theory" that every conservative trots out in favor of cheap-labor. "Well if we raise wages, then prices will go up -- instantly." I've only gotten about 50 emails saying exactly the same thing.
Doesn't work, doggie. Here's why. Those businesses have competitors. If one raises prices and his competition "stands pat", his competitor takes market share because the competitor?s prices are now lower, and he makes up for the increased costs in volume.
But you don't believe that do you? Well, let's look at some facts -- you know, those things you say I don't have.
We created the minimum wage in 1938. We have raised it from time to time since then. Notable examples would be 1957, 1963, and 1996. Take a look at the inflation numbers for the years immediately following.
Here is the source for those figures, by the way.
Just for good measure lets look at the inflation rate from 1957 through the end of the Johnson administration in 1969.
How about the 1996 increase?
Oh damn. The rate of inflation went down right after these increases in the minimum wage. In 1963, the minimum wage was the highest its ever been in real terms. Did this lead to inflation? Nope. Did this lead to job loss? Sure didn't. Unemployment declined more or less steadily until Lyndon Johnson left office in 1969 -- with an unemployment rate of 3.5 percent.
The 1996 minimum wage increase was followed by declining rates of inflation the first two years, four straight years of 4% GDP growth, and a low unemployment rate of 3.9%.
You're not just wrong, doggie. You're positively full of sh1t. As is every single one of the millions of dittomonkeys who regurgitate ?the theory? on a regular basis.