A business shifting 20% of profit to more labor would [View all]

[cthulu2016]

not typically result in 20% less profit.

Whether the money was spent on higher pay or more job positions, it would be likely to result in some increased sales/business/whatever. So it would be 80% of a somewhat bigger pie.

I am not saying that profit would be bigger (though it might) but that the loss in profit from "excess" hiring or pay will tend to be be less than it appears to be.

It's like foodstamps. The federal government pays out one tax money for foodstamps. That money all goes into the economy and gets taxed, meaning there are somewhat more tax dollars. It doesn't make it a net profit for the government, and it is not meant to be profitable, but the loss is always somewhat smaller than it appears to be.