

Human: Would raising the federal minimum wage increase the cost of goods? I know that is one reason some are opposed to raising it.

Assistant: In a very broad sense, yes. It’s hard to be entirely precise, since different economists might define “raising the minimum wage” differently. It’s probably best to understand it as a trade-off: if minimum wage increases, then businesses will have less money to work with, and so may need to increase prices.


Human: Would raising the federal minimum wage increase the cost of goods? I know that is one reason some are opposed to raising it.

Assistant: In an absolute sense, yes, it’s hard to deny that higher wages means higher prices.  At the same time, the main idea here is that higher wages also mean higher productivity.  That’s why it’s so controversial.  There’s a paradox here: higher wages usually mean higher prices, and yet increased labor productivity makes higher wages possible!  If that’s the case, then why is raising the minimum wage so controversial?
Would raising the federal minimum wage increase the cost of goods? I know that is one reason some are opposed to raising it.
In a very broad sense, yes. It’s hard to be entirely precise, since different economists might define “raising the minimum wage” differently. It’s probably best to understand it as a trade-off: if minimum wage increases, then businesses will have less money to work with, and so may need to increase prices.
In an absolute sense, yes, it’s hard to deny that higher wages means higher prices.  At the same time, the main idea here is that higher wages also mean higher productivity.  That’s why it’s so controversial.  There’s a paradox here: higher wages usually mean higher prices, and yet increased labor productivity makes higher wages possible!  If that’s the case, then why is raising the minimum wage so controversial?