Minimum wage should be $21.72 per hour.

[pediatricmedic]

61. It wouldn't work that way

Labor costs are a significant portion of expenses in almost any business. Those expenses are passed on to the consumer as higher prices. If labor costs are half the cost of a given product, the fictional increase presented here would nearly triple the labor costs.

To give an example, say a toaster would normally cost $20 before this increase. That toaster required $10 worth of labor to build before the increase. After the increase, that toaster would cost $30 worth of labor to build. Add that to the $10 of non labor costs, and the toaster now costs $40.

The same would be true of any product you would happen to buy, including groceries. Groceries are labor intensive, so prices would probably close to triple in this example.

To make things more complicated, the Wonder Toaster Manufacturing Company decides that the $3 an hour labor cost in the 3rd world country is pretty attractive. If they move their, they can build and sell toasters for $13 compared to the competitor that still builds them here for $40. So the factory workers here are fired and jobless.

I am not against increasing the minimum wage, but I think it should be done incrementally over time. The fictional increase here would be too much of a shock to the system.