How much is your dollar worth?
So… Minimum wages have been a hot topic all over the place, and with a few business owners we were discussing the impact. Most were a little
frustrated, worrying about having to pay workers more and cut already thin profit/operating margins, while a few didn't really mind the
The first concern was, "we're going to have to raise prices", to which I immediately thought, "so will everyone else." And the increase really
isn't that much when you calculate wage cost to revenue. And increase of 10% could be as little as a 1-2% increase in per customer cost. Or as high
as 5% depending on the industry. (Possibly more in ones I'm not thinking of)
Someone is going to lose to some degree, as money is redistributed and certain people/corporations gain/lose buying power. Unfortunately, looking at
this for unbiased information is a tough deal. Giving consumers more buying power, means certain vendors will gain more client business. If they do
not have labour intensive workforces, this can be a huge increase for them. As well, a nation with more buying power means more imports, and when you
factor in global trading… A whole country of higher paid households makes a big difference. At the same time, there are plenty of industries that
will be harder hit by it, but then again most of them have already shipped jobs overseas seeking the lowest paid workers possible.
Anything coming out of the media is highly biased. Heck, most people in econ are either being supported indirectly during their studies, or they have
finished and are working for the system in place. Making it hard to find people with credentials making a reasonable effort to present unbiased
In any case, I was looking at Australia particularly. The highest minimum wage as far as I can tell. The following article discusses purchasing power,
which I found after searching around on the topic.
Minimum Wage And Purchasing Power Parity: Only Nine Countries Have A Higher Minimum Wage Than The US’
The info graphic (see top) is kind of funny as they point out Australia's purchasing power is not even close to its minimum wage, but most
importantly, it's still near the top of the list. Other media sources report Australia's "worst rate in over a
, yet they still
have lower rates than the US, and many other countries.
Purchasing power. While it's nice to say I make (x) amount of dollars every year… It's been a long time since anyone could leave the west and hit
a third world/developing nation, living like a king off marginal amounts of cash. Most places in the world are just as costly as any local city. The
noticeable change happens when you hit rural areas, and it's apparent you can get by for next to nothing. But it's not like any tourist areas are
going to let you do that.
When you factor in purchasing power though, you will notice the highest minimum wages also have the highest purchasing power.
I don't think a minimum wage is going to make/break an economy, but it for sure will have an impact which forces industries to reshuffle. As for
small business, paying workers a little extra is something many do to encourage good workmanship, give incentives, and demand good performance.
Many small businesses rely on consumers. Some of them are the same people that work in for minimum wage. If I own any type of sales/service, I may
have to charge a little extra or incur the cost of paying workers a little bit more, but if my clients start spending extra when they come in,
suddenly those costs are easily offset.
I was going to source some of my opinions backed up with studies that might be similar. But I digress, in my search for unbiased information I could
not find any studies that were not backed by either progressive or conservative think tanks. And I just find it bad taste.
If anyone has any good references to completely unbiased information I'd be interested.