Friday, July 17, 2009

Rant: Minimum Wage Increase

The dollar is about to be devalued again, as minimum wage will soon be increased to $7.25/hour. Remember the "gold standard"? now we have the "commodity labor" standard. ...and the standard is about to be adjusted downward.

$1 will now be worth 8 minutes and 17 seconds of commodity labor (mundane jobs like floor sweeping which virtually anyone can do).

This change will have a ripple effect whereby prices will adjust to reflect the new value. During this adjustment period those getting "minimum wage" will have a temporary advantage in the marketplace. Over time this ripple will settle out, and those making minimum wage will be back in the same position in the economy as before.

The value of commodity labor and the value of commodity goods will, on the whole, maintain their relative proportional balance. A gallon of gas will, after this economic ripple effect settles down, still cost 1/3rd hour of work - no matter the numeric declaration of the medium of economic exchange. Whatever a dollar is, and no matter how many of them you get for sweeping floors for an hour, you'll still have to sweep a floor for about 20 minutes to buy a gallon of gas.

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