True or False? Inflation devalues wages.

Again, did you see my earlier post showing the correlation between inflation and wages? Inflation definitely affects wages.

So are all other prices. Inflation affects all prices. Why would the price of labor be any different?

We've already gone thru all this earlier in the thread.

It doesn't disprove it at all. Inflation affects all prices, but that doesn't mean other factors don't affect them as well. The fact that individual prices move up or down in relation to the inflation rate does not mean that inflation has no effect on them, it just means that there relative value has changed. It's no different with the price of labor. In the mid to late 70s, wages went up far faster than other periods, and it wasn't because of a dramatic increase in productivity or income. It was because inflation affects wages as well.

I posted the data and links earlier in the thread.

 

More dishonesty from you. I answered your question twice, once in post 434:

And again in post 463:

 

That's right, rather than honestly admit you were wrong and your response was false, you simply tried to claim you weren't "referring" to those things when you flat out said those weren't Paul's policies.

Which leads me to believe you simply aren't "referring" to other true facts in other statements you make. Others can decide for themselves.

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Addressed earlier in the thread. You didn't prove that the wage was devalued. You simply argued that they didn't increase in value by 20%.

 

I understand that "belief" and other faith-based subjective opinions are as good as facts for you, but they're not good enough for others who require an argument to be disproven instead of your typical MO of ignoring posts, continued false ad hominem attacks on credibility, and other logical fallacies you love to use against me.

 

Certainly it does. They need to rise and fall in parallel and not merely both go up over time, if indeed a causal relationship exists, which it does not.

Other things that have increased, along with cost of living and the median household income, nominally: Super Bowls have a higher numerical value; so too do Academy Award Shows; also Internet bandwidth is on the increase. Make any correlation you wish. But showing the causal relatioship is a smidge more meaningful.

 

Again, did you see my earlier post showing the correlation between inflation and wages? Inflation definitely affects wages.

[/QUOTE]

Again, upon what basis do you contend that inflation affects the prices of everything in the market but somehow excludes the price of labor?

 

devalue (v.) 1. Reduce or underestimate the worth or importance of.

Inflation preventing somebody's real wages from going up as much as they should most certainly constitutes underestimating the worth of their labor. Proving their wages are devalued.

 

Source please.

If wages have gone up 20% and inflation is 10%, that means they can buy roughly 10% more goods and services for the same wage.

Exactly how is the ability to buy more stuff equivalent to: "Reduce or underestimate the worth or importance of." Their wage has not devalued by appreciated in value.

 

Again, upon what basis do you contend that inflation affects the prices of everything in the market but somehow excludes the price of labor?[/QUOTE]

No; I didn't go to the trouble of looking, since I already know the drivers of wages and inflation, which are separate.

For example, during the Carter Admin we had double-digit inflation. Did wages increase in parallel? In 1950, we increased the minimum wage by over 80%. Did inflation increase or decrease in the 24 months following? Wages have slowed over the last 1/3 century, and not kept pace with inflation. How do you resolve that contradiction, if as you believe, a relationship exists?

Inflation drivers: monetary policy; certain commodities; slowing consumption.

Wage drivers: minimum wage; unionization/prevailing wages; demand for workers.

So you see, they have very little to do with one another.

 

https://www.google.com/#hl=en&sugex...550,d.dmQ&fp=4d739617f392435f&biw=992&bih=850

But if inflation was 0%, they'd be able to buy roughly 20% more goods and services for the same wage.

Because their real wages didn't go up as much as they should have, so inflation caused the worth of their labor to be underestimated.

 

The price of gas at the pump doubled over a very short period of time, quite recently. What component was labor-cost?

 

From Googles sources:


devalue
 
verb (used with object)
1. to deprive of value; reduce the value of.
2. to fix a lower value on (a currency).
http://dictionary.reference.com/browse/devalue

1. To lessen or cancel the value of.
2. To lower the exchange value of (a currency) by lowering its gold equivalency.
Read more: http://www.answers.com/topic/devalue#ixzz2K31129u7

1: to institute the devaluation of (money)
2: to lessen the value of
http://www.merriam-webster.com/dictionary/devalue

1. To lessen or cancel the value of.
2. To lower the exchange value of (a currency) by lowering its gold equivalency.
http://www.thefreedictionary.com/devalue

Google isn't a dictionary but a search engine. None of its sources contains the definition that pops up.

If inflation was zero, then the wage increase would have been 10%, because 10% of it comes from inflation.

But even so, the fact is that the wage has not devalued, it has appreciated. You are only arguing about how much it appreciated.

What? Who said anything about estimating the worth of their labor.

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I don't know. What?

 

The fact that wages didn't double, which means a wage earner can now only by half as much. Is this really that hard to understand? Did someone imply labor causes inflation?

 

No; I didn't go to the trouble of looking, since I already know the drivers of wages and inflation, which are separate.][/quote]

You stated there was no correlation. The data I cited proves you are wrong. The fact that you have no interest in it suggests you have no interest in the truth.

See my prior data. Yes, wages did increase far more rapidly in parallel with inflation. There is a very strong correlation. If you looked at the data you would know this. But you don't seem interested in knowing facts.

You could say that about the price of anything. The price of anything depends on supply and demand. Yet do you deny that inflation affects prices in an economy? So why is the price of labor any different than the price of bread?

 

20 years ago minimum wage was $5 an hour, a pack of smokes was $1.25 and a gallon of gas was $1.25. Now minimum wage is $7.25, a pack of smokes is $4 and a gallon of gas is $4, roughly. The same can be said for anything people buy outside of electronics and car insurance. Those are the only 2 things I have seen go down in that time frame. How anyone can say inflation doesn't devalue labor, or that labor effects inflation, or that wages have kept up with inflation, blows my mind.

 

You stated there was no correlation. The data I cited proves you are wrong. The fact that you have no interest in it suggests you have no interest in the truth.



See my prior data. Yes, wages did increase far more rapidly in parallel with inflation. There is a very strong correlation. If you looked at the data you would know this. But you don't seem interested in knowing facts.



You could say that about the price of anything. The price of anything depends on supply and demand. Yet do you deny that inflation affects prices in an economy? So why is the price of labor any different than the price of bread?[/QUOTE]

It's not really. Pay a worker, and the worker will spend the dollars into the economy. Buy a loaf a bread and farmers, mills, bag-makers, delivery truck drivers, merchandizers and retail stores all benefit, too.

But, there's a dymanic in the reverse of what you postulate: when workers make more, prices of many goods fall due to increased competition and economies of scale. The Ford Model T became less expensive since more were bought, and did not increase in price when Henry willy-nilly increased pay from about $3 / day to $5 / day, forcing other manufactures' wage to increase, too.

And here's how that dynamic would work today:

We increase the minimum wage, say 50%. Ahhh!!! Your local clothing store just had labor as a percentage take a big jump. But then, a large percentage of the local workforce is now more able to buy stuff, and come flocking in to buy some from your local clothing store. A cashier whose marginal added cost is maybe $4 / hr needn't ring up many incremental sales in an hour to more than cover the cost. Plus occupancy is no more costly. Inventory, now being purchased in larger quantity, can be bought for less. The store owner realizes: Man oh man, how I LOVE VOLUME!!! So, and because of the growing consumption another retailer opened up nearby, the owner wants more volume still, AND HAS MORE AND MORE AGGRESSIVE SALES. The higher wages, as a percentage of volume, might stay the same or even diminish. And many other costs, such as occupancy and utilities, are decreasing as a percentage. Net profit is up, so the owner is making more and maybe thinking that bonuses for managers might build some loyalty, and be better spent than by keeping 70% for the owner and sending 30% to the IRS. Things happen when sales increase, which higher wages, on average, do.

 

Great. So what?

And here's how that dynamic would work today:

I have no problem with increasing the MW. Though there is a limit to how much you can increase it before the resulting decrease in employment offsets the value of the increase.

And there are several other ways we could increase middle class incomes: Lower FICA taxes, remove the SS cap, increase taxes on the richest up to 50% like Reagan had them most of his term, make investment taxes the same as income taxes like Reagan had it, make inheritance taxes equivalent to income taxes, increase the power of unions so they grow and can leverage higher wages for workers, expand the OT laws so that they apply to more workers, make benefits available to part time workers, just a few off the top of my head.

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Because you are confused between inflation and the relative purchasing power of labor. I agree the MW has relatively gone down because of inflation. But the MW isn't set by the market, it is set by Congress.

 

Minimal and having almost no bearing on end-user prices. Barrel-cost, of the raw material was a factor. Then some tinkering with market perception (fires at a couple refineries, while other refineries were still functioning at less than full capacity) created a convenient excuse for raising prices and price-gouging to a degree that for other less influential (politically) might subject them to repurcussions, but was no worry whatsoever for Big Oil. They had, and are having, a friggin' field day, unmitigated by policies that affect other industries, and is not in any way increasing wages to an extent commensurate with the higher worker cost of getting to the office, or consumer cost of getting to the store. In fact, wages at many companies, i.e UPS, cab drivers, long haul / LTL might decrease since those employers can whine to thier employees about how much they're paying to gas up the vehicles.

 

Paying workers more, benefits us and our economy, since among other things, we'll buy more bread.

 

Raising the mininum wage has never decreased employment. Never. In fact, when we raised it the most, 1950, unemployment was cut in half in the 24 month following the increase.

And the dynamic / causal relationship is quite simple: more money being spent into the economy raised demand, and companies are forced to hire workers to meet the increased demand.

 

Oxford English Dictionary:

devalue

[with object] reduce or underestimate the worth or importance of

http://oxforddictionaries.com/definition/english/devalue

Not if the 20% comes entirely from increases in productivity and technological development. Then 0% of the wage increase is due to inflation.

If it hasn't appreciated as much as it should have, the worth of their labor and thus wages have been underestimated, and therefore devalued.

That's what a wage measures.

 

I agree that the correlative data suggests that demand for low wage labor is fairly inelastic (and thus a change in wages results in a lower change in unemployment). However, it is incorrect to say that "Raising the mininum wage has never decreased employment." We raised it in 2007 and 2008 and employment decreased drastically.

But the fact that it is relatively low wage demand appears inelastic does not mean you could make a 50% increase and not see a significant effect.

 

If 20% came from increases in productivity and demand, then you'd see a 30% increase in wages with 10% inflation.

If inflation is 10% and wages increase 20%, then by definition, the real, or inflation adjusted increase, is 10%.

Not appreciated as much =/= devalued

A wage measures an estimation? What?

 

The Great Recession played an OVERWHELMING roll in job losses, which eclipsed by a great margin, the minimal (barely in excess of inflation) FMW increases you mentioned.

So that's not merely another spurious correlation, it's an egregious one. Come on, Iriemon, get real.

 

Of course. You claimed that "Raising the mininum wage has never decreased employment. Never." I was simply giving a recent example of when an increase in the MW was followed by a rapid drop in employment.

You can try to prove that none of that had anything to do with MW if you want.