The point I was making about buying power was that raising the minimum wage will not increase the buying power of those at the minimum because costs will adjust to match.
Good point. Except, of course, that we've raised the minimum wage before, and there's never been inflation related to the wage increase, ever. one of those things that sounds promising in your head, but on paper makes no sense and in practice is obviously idiotic.
If there really were no adjustment or other negative economic effects, then why stop at $15/hour? Why not make minimum wage $50/hour? Then everyone would be economically comfortable, right?
There's a reason why even minimum wage advocates always increase it in small bits and over time. Because by keeping it small, it minimizes the cost adjustment, thus ensuring that the majority of people who earn significantly more than the minimum wage don't notice it. That way they can continue to use the same argument as a wedge issue in election years. Which is really the point of all of this.
For costs to "adjust to an increase in the minimum wage" that increase would have to be, in aggregate, about 1000 times larger than it actually is (not hyperbole, it's really that stupid of an idea). About 3 million workers are paid minimum wage. They work about an average of 1000 hours per year. Raising the minimum wage $5 an hour brings in about another 2 million employees who would now be below the federal minimum, also averaging about 1000 hours per year. So let's just say 5 million at 1000 hours each, or 5 billion hours per year. Let's also just assume they all get a raise of $5, pushing an extra $25B into the economy annually. Your argument is that this $25B increase into a 15 TRILLION+ GDP is going to cause inflation.
Huh? It doesn't increase or decrease the money in the economy at all. We're not talking about monetary inflation. We're talking about consumer price adjustments (which can lead to inflation, but it's not about measuring one against GDP like you're trying to do). If you raise the wages of the workers in a store, the store must increase its prices to make up the difference. Calculated directly, this is a small increase because compensation is only part of the total cost of business. However, much of those other costs *also* involve labor (actually you can argue that all of them do). Someone is paid to make all the products you sell in your store. Someone else is paid to package those products. Someone is paid to deliver them. Etc, etc, etc.
The effect on this isn't just about the dollar increase in the wages of those working in the store, it's the wage increase for everyone involved in any part of anything sold in that store or used by the store in the process of selling those goods. And the larger the wage increase, the more people's wages increase, and the larger this effect. Given that the majority of near minimum wage workers work in retail/hospitality industries, this means that it directly affects everyone. It affects those with lower incomes *more* than those with high incomes, because they're spending a larger portion of their earnings buying groceries. But those are the very people you're claiming to help by increasing the minimum wage.