Lets take a look at a little history, un – rewritten history that is. History is always a good indicator of what will happen in the future.
In the table above are items and their average prices in 1970, along with the average annual income in 1970. Next to 1970 numbers are the same items with their average price in 2013 along with the average yearly income. (2013 being the latest year I could find from government source.) In the last column is the percent of increase between 1970 and 2013.
Note that while the average annual income increased by 371.50%. All the prices of items increased by more than double the percentage of increase in annual income with the exception of a pound of hamburger. There are more than one reason for the increases in the cost of items in the list, inflation being one, increased taxes, but also a major component driving the increase is the cost of labor. Everything we buy has its price set with a refection of the cost of labor required to manufacture, bring to market, and sell the item.
So the question would be did the raise in annual income give the average person any more buying power?
Lets take another example.
Above is the cost of an average fast food standard burger. With its cost in 1970 and 2013. Its increase in cost increased over a thousand percent in 43 years. The minimum hourly wage increased from $1.00 to $7.79 an increase of 679%. However, here again we see an almost double percent of increase in cost of a burger as compared to the increase in hourly wages percentage. So again we ask, did the person flipping those burgers really get an increase in buying power?
Now everyone is screaming for a living wage with an hourly minimum increase to $15.00 and Joe is going to give it to them. Is it really going to give them a living wage for very long? Almost certainly the price we all pay for items will reflect the increase in labor content cost to manufacture, bring to market, and sell an item.
I have seen the argument that the cost of labor will not be added to the price of item because competition will force the supply chain to eat the cost increase. That is not the way it works, labor cost has always been a component of price and always will be.
The potential down sides to raising the hourly minimum wage are: First, I will give retailers incentive to buy goods off shore, lower labor cost, less cost to manufacture. Thus reducing manufacturing jobs in the U.S. Second, some employers will reduce the number of employees to off set the increase in total labor cost. Both of these have a negative affect of the number of available jobs. Couple this with the fact that the cost of living will increase over a short time and off set the increase in earnings makes it hard to see the benefit of raising the minimum wage.
If you want a living wage, go back to school or learn a trade, something that prepares a person to earn a living wage.