General Discussion
In reply to the discussion: Let's pay 16 year olds $31.2k to sweep floors!!!! [View all]whatthehey
(3,660 posts)Might be on burgers at the local diner so that business owner gets more revenue to pay her fry cooks $15 so they spend that money maybe at the car stereo shop so that business owner makes more revenue to pay his parts runner $15 an hour so he then spends his wage at...yep the good ol' KKK general to increase their revenue to cover that sweeper's raise.
It's all about marginal propensity to consume. Poorer folks are generally at about 100%. They have so many unmet needs and wants that any money in their pocket goes straight back into the economy. Give me an extra $7 an hour and I'll gladly take it but it goes into retirement funds, which have a pretty minimal economic multiplier until quite a ways down the road. That's because I'm pretty comfortable and have few unmet needs. I don't have a desperate need for a washing machine I can't afford or repairs to an old rustbucket to keep it going. But min. wage people do, so that extra money goes to the mechanic or the appliance store who are paying those higher wages themeselves, hence the multiplier effect. Money in the hands of the poor drives consumption. Consumption drives the vast majority of the economy. If you want a better economy, give money to the poor. This isn't even pure dewy-eyed altruism, much as I genuinely wish to improve the lot of the working poor. It's people like me who own shares in the companies that will get those dollars in revenue. I'll benefit from that extra consumption too even if my wage stays the same. Even if I didn't have investments I'll benefit from the massive increases in FICA taxes they will pay when I retire, and from the extra sales tax revenue my city collects to fund improvements.