Maybe retail prices will go up, maybe they won't. The assumptions that all financial relationships are linear and inflexible is not a very good one. First, lets assume that in a P&L or income statement, the minimum wage worker is in COGS, cost of goods sold. so without any changes in revenue or pricing, margins go down. Now margins change all the time for various supply chain and other costs. from margins SG&A costs are spent. Now to maintain the same operating income on a lower margin, some SG&A costs are unaffordable. . . or maybe the owner will accept a lower operating income even after everyone else maintains the same pay.
So every company and owners are different, some may increase prices because they feel entitled to a certain level of income, some may not, however, the business world decisions are never one dimensional and a guarantee. But I will say if you look at the data over the last 50 years, the minimum wage was not indexed to inflation, as a previous poster personally demonstrated.
So everyone on a salary and receiving social security received an inflationary raise, which means that their purchasing power remained the same, didn't increase, didn't decrease. Your ability to increase your wages comes from promotions or increased skills or higher demand for your skill. Minimum wage did not get that increase anfor nually many years, so business and everyone else enjoyed the increased profits or the reduced inflationary effect. . .
However, when the spread gets very wide, there is a reversion to the mean, and this increase is an example of that, bringing the relationship back in line, or closer to in line with the intent of the rate, entry level employment or unskilled labor
But not all jobs can be replaced by machines, there will be some. . . but lets not let schadenfreude be the rule of the forum. its an opportunity for the entry level or for the working class who has no opportunity to increase skills to earn a bit more at the expense of business income margins, and the business will adjust. . . how, not sure, everyone is different. The salaried class and retired class gained while they didn't at different times in the past, the world isn't linear or constantly fair but we aren't all victims all the time either. . .
finance guy
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