ECONOMICS AND FALLACY REBUTTAL TIME
The devaluing of $20 (or any amount of money) over time is due to inflation, which is itself the summation of many influences in an economy, like government spending, the accumulation of “new money” through interest, the strength of the stock market, the fact that we no longer use the gold standard, the globalization of the market, etc.
That said, here’s the net inflation between 1998 and 2005, and 1998 and 2013.
So, long story short, the number of items in that third cart should be more than half of the amount in the original cart by relative value — in fact, more than two-thirds! (the math works backwards: if the items cost 42.9% more, then by reciprocals, you can purchase ~70% as much of those items). The image is misleading to say the least. Now, with that out of the way…
"Can we stop pretending it’s still possible to live on the minimum wage?”
As of July, 2012, the minimum wage in the U.S. is $7.25. You need to go to this page right now and scroll down through all of the countries whose minimum wage is less than that. Those people are still alive, aren’t they?
Insert snarky cynicism here.
Point #3: joking aside, increased minimum wage does not equate to increased living standards. Case in point: wages are a cost for businesses, which are profit-oriented, meaning that when wages are forced upwards, one of two cases occurs:
- The company must now increase the cost of their products and services in order to accommodate the increase in expenditures. Effectively, this means that those increased wages…will be able to purchase less (and inflation creeps back into the system).
- The wage increase makes the company’s business no longer profitable, meaning the whole company collapses. Now none of those workers have jobs and they can’t get anything whatsoever.
To further cement my point, let me provide some data on Australia.
Australia has one of, if not the, highest minimum wages in the world, at $16.37 AUD (that’s $15.33 in USD, unit rate is 1 to 0.936). Using values from this site:
- $1.50 AUD/ liter of gasoline —> $6.06 USD / gallon, compared to ~$3.50 where I live
- $4.20 AUD/ 3 liters of milk —> $1.495 USD / liter, compared to $0.96 / liter in the states (data from Oct 2008, US price acquired here)
- $4.50 AUD / Big Mac —> $4.81 USD, for just the sandwich. In the US at the same time, a Big Mac sold for $3.57.
And so, in brief:
If the minimum wage is artificially raised by a governing body, the net result for the worker is always negative. If the minimum wage is pulled up by market forces, i.e., if the economy grows and company revenues increase faster than other costs like capital, then there will be a blanket increase in quality of life, meaning everyone — the workers, the corporate heads, the consumers — will be satisfied with the result. I could go on for ages about this, but someone I know has already said everything I could add here. I encourage you to read it on your own time.
Any questions? I’m all ears.