Punkinhead wrote:If you raise the minimum wage, it gets offset by a raise in inflation. The constant equilibrium that capitalism needs will always stay. Raise wages, raise prices and vice versa.
Although the problem now is that minimum wages haven't gone up since they were set at $5.15 and inflation continues its 2+% rise each year.
A forced minimum wage is not an attribute of capitalism. To the free market, it is an artificial price floor on labor costs.
The only way that wages can increase without causing problematic inflation is the introduction of productivity gains into the equation. Unfortunately for labor, too much productivity gain results in a need for less labor. Productivity has been rising a lot faster in recent years, putting a lot of downward pressure on the labor market. Of course, this puts downward pressure on product demand as workers' stagnant wages won't allow them to buy the same level of goods & services. The consumer responds by taking increased debt which puts upward pressure on interest rates (we're there right now). When rates get high enough, it becomes more costly for businesses to invest in new technology to increase productivity, so they turn to labor to meet demand. Armed with new buying power, the consumer pays down debt and buys products with free cash flow. As consumer debt shrinks, this puts downward pressure on interest rates and the whole cycle starts over. Unfortunately, there are a few things going on that doesn't bode well for labor or the economy in general:
1. 30 year treasury bonds issued in the 80s will mature in the 2010s. Every year, hundreds of billions of dollars in treasury money will have to pay the face value as they come due, on top of all the interest it pays now. The national debt will come home to roost.
2. Technology is moving ahead so fast that the free market is having problems integrating it into the system without initially causing adverse effects on the labor force.
The reality of #1 will soon have Americans beating down the doors of Congress, demanding a balanced budget.
...Oh, the freedom of the day that yielded to no rule or time...