Wednesday, June 04, 2014

Obfuscation and Evasion

Tom Dispatch, via, attempts to debunk the theory that raising the minimum wage would have any deleterious effects. In response to the question asking if companies would not merely pass the higher wages on in the form of higher prices, the author replies,

Maybe, but they are unlikely to be significant. For example, if McDonald’s doubled the salaries of its employees to a semi-livable $14.50 an hour, not only would most of them go off public benefits, but so would the company — and yet a Big Mac would cost just 68 cents more. In general, only about 20% of the money you pay for a Big Mac goes to labor costs. At Wal-Mart, increasing wages to $12 per hour would cost the company only about one percent of its annual sales.

I have no idea what he means by “but so would the company” in terms of going off public benefits, but the bit about the Big Mac is interesting. He says it would “cost just 68 cents more,” presumably bolstering his “unlikely to be significant” argument about increased prices. I’m not sure in what universe a 20% increase would be considered insignificant.

As for Wal-Mart, he says it would reduce their annual sales volume, but he says nothing about what it would do to their prices, which is a bit odd given that he is responding to a question about businesses raising prices.

I am not opposed to raising the minimum wage but, unfortunately, this is the kind of discussion we get today. No one seems to be able to actually make their case without resorting to obfuscation, as with the price of the Big Mac, or evasion, as with the Wal-Mart sales.

Why not admit that it will raise prices and make the case for that being justifiable? Or, alternatively, make a case that it will raise prices only in areas where the price increases don’t matter? If your cause is valid, why not engage in honest discussion about it?

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