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The argument that the living wage would cause small businesses
to close is also misguided since both
large and small businesses would need to adjust prices in order
to maintain current profit expectations.
But this is where the administrations proposal fails the
economic litmus test. If we tie the living wage to
the price level, and prices increase in order for businesses to
make ends meet, one can easily imagine a
scenario in which inflation would then spiral out of
control.
A More Careful Approach
Some economists have suggested connecting the living wage to a
more representative economic signal,
such as the median income level, instead of fluctuating price
levels. Since inflation does not always
increase with economic growth, like in the 90s, this would not
only help the lowest wage earners reap
the benefits of a growing economy but would also keep the wage
from putting constant upward
pressure on prices regardless of the nations economic situation
.
In fact, the United Kingdom has already done this by
establishing their minimum wage at 46% of the
nations median wage. And not only has this created little, if
any, negative effects to economic output;
this setting has decreased overall economic inequality.[2]One
notable inequality economist has made
the point that if the U.S. had implemented similar wage
standards in 1968, the current minimum wage
would be above $20 an hour and economic inequality would be at
much more reasonable levels.[5]
Other Sources:
[1]http://nelp.3cdn.net/d085afbb3c5e773119_ynm6ib7pw.pdf
[2]http://www.economist.com/blogs/freeexchange/2013/02/labour-markets
http://www.economist.com/blogs/freeexchange/2013/02/labour-marketshttp://www.economist.com/blogs/freeexchange/2013/02/labour-marketshttp://www.economist.com/blogs/freeexchange/2013/02/labour-marketshttp://inequality.org/minimum-wage/http://inequality.org/minimum-wage/http://inequality.org/minimum-wage/http://nelp.3cdn.net/d085afbb3c5e773119_ynm6ib7pw.pdfhttp://nelp.3cdn.net/d085afbb3c5e773119_ynm6ib7pw.pdfhttp://nelp.3cdn.net/d085afbb3c5e773119_ynm6ib7pw.pdfhttp://www.economist.com/blogs/freeexchange/2013/02/labour-marketshttp://www.economist.com/blogs/freeexchange/2013/02/labour-marketshttp://www.economist.com/blogs/freeexchange/2013/02/labour-marketshttp://www.economist.com/blogs/freeexchange/2013/02/labour-marketshttp://nelp.3cdn.net/d085afbb3c5e773119_ynm6ib7pw.pdfhttp://inequality.org/minimum-wage/http://www.economist.com/blogs/freeexchange/2013/02/labour-markets
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[3]http://www.foxbusiness.com/economy/2012/06/08/ready-or-not-stagflation-is-here/
[4]http://dollarsandsense.org/archives/2006/0906drdollar.html
[5]http://inequality.org/minimum-wage/
Graph
fromhttp://www.motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph
Author Bio:
Reece is a research analyst, content specialist and editor
atChooseWhat.com. When he's not honing his
Googling prowess and blogging skills, he's keeping up with the
latest in small business and technology
news from around the country. Reece is also a moderator and
major contributor to ChooseWhat's small
business forums; lending his knowledge of the tech industry as
well as SaaS expertise to the world at
large.
http://www.foxbusiness.com/economy/2012/06/08/ready-or-not-stagflation-is-here/http://www.foxbusiness.com/economy/2012/06/08/ready-or-not-stagflation-is-here/http://www.foxbusiness.com/economy/2012/06/08/ready-or-not-stagflation-is-here/http://dollarsandsense.org/archives/2006/0906drdollar.htmlhttp://dollarsandsense.org/archives/2006/0906drdollar.htmlhttp://dollarsandsense.org/archives/2006/0906drdollar.htmlhttp://inequality.org/minimum-wage/http://inequality.org/minimum-wage/http://www.motherjones.com/politics/2011/02/income-inequality-in-america-chart-graphhttp://www.motherjones.com/politics/2011/02/income-inequality-in-america-chart-graphhttp://www.motherjones.com/politics/2011/02/income-inequality-in-america-chart-graphhttp://www.choosewhat.com/http://www.choosewhat.com/http://www.choosewhat.com/http://www.choosewhat.com/forums/http://www.choosewhat.com/forums/http://www.choosewhat.com/forums/http://www.choosewhat.com/forums/http://www.choosewhat.com/forums/http://www.choosewhat.com/forums/http://www.choosewhat.com/http://www.motherjones.com/politics/2011/02/income-inequality-in-america-chart-graphhttp://inequality.org/minimum-wage/http://dollarsandsense.org/archives/2006/0906drdollar.htmlhttp://www.foxbusiness.com/economy/2012/06/08/ready-or-not-stagflation-is-here/
