Economics/Minimum wage.


If by some miracle minimum wage does get bumped to $15/hr how will many employers afford it? Walmart I suspect could afford it but my uncle owns a small town staple of a store (on verge of closing it) and he said before the last minimum wage hike he  had no issue paying people more than it, but before he decided he had to close his store (unrelated to wage) he said if minimum wage had gone to $9 or higher he would not have been able to stay in business. What compensating can the government offer employers to make paying employees possible? Reduced sales tax, fewer fees to regulatory groups, or what exactly?

I do apologize for the delay.  Such an increase in minimum wage would be inflationary. The mechanisms of transmission will have prices reflecting such increase in whole or in part.  I believe Walmart pays more than minimum wage from what I read, not sure if it is 17 an hour or so. But certainly, they won't be affected in this case. Other businesses will be affected if they have to hike wages by the new minimum wage.   Government should, in my opinion, not attempt to control prices, and wages are the price of labor.  Thus, if no price control existed, there would be no need for subsidies. If the government were to compensate the hike in wages, the policy would most likely be a wash and end up in an inflationary situation due to cost push. Hope this helps.


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