======== "If you raise the price of something–anything–it lowers demand"
I hate to break it to you, but this is completely wrong, I was being polite before, I'm being more direct now.
I know what you are trying to say, but you're using the wrong language, which is maybe an indication of the lack of understanding of the the underlying micro econ in this statement.
Changing the price of a good does not 'decrease demand'. It changes the supply curve - and given an identical 'demand curve' (aka demand does not change), there may end up being less consumption of that good.
But it also depends entirely on other factors, which I explained.
======== "If you're earning your employer $10/h and the minimum wage rises to $11, you will not have a job. Either right away if the employer realizes it, or eventually when they go out of business if they don't."
No - again, this is even worse than wrong, I don't know what to say at this point.
To put it in simple terms, wage changes happen all of the time, and even minimum wage is increased without necessarily affecting jobs.
In short, if minimum wage at Subway sandwiches go up from $14 to $15 - more than likely we'll see prices go up a bit, profits go down a bit, and probably not a change of employment.
(And again, the price of wages does not affect demand, it affects supply)
========= "Profits have nothing to do with it. "
"If a business has employees at some wage and the minimum wage rises above that wage, they will, at least eventually, replace the low-wage employees with new ones"
Ok, now either you're trolling, or you really are having a hard time understanding the basics of finance, economics or business here.
Yes, if an input cost is raised, then a business will adjust. You are correct to suggest they will likely 'do something'.
But what are their options: 1) 'Replacement' - no, they can't replace with cheaper workers - because of minimum wage 2) 'Automation' - ok, but what 'automation'? And at what cost? Do you think there are magic robots waiting to replace workers at Subway? Now, there definitely are a lot of new technologies, but, Subway is looking at that new tech irrespective of what 'minimum wage' is.
And profits have everything to do with it. A wage increase means the money has to come from somewhere: higher prices, lower output to suppliers, or profits. Subway sandwiches, faced with this dilemma - has to make a choice. It may be more rational to simply have less profits.
Now, as you hint, there may be no room for manoeuvre - maybe there is 'no way out' and Subway sandwiches is going to go bankrupt. That could happen, but in most cases, not.
========= "Otherwise, prices may rise. Not without an associated drop in demand."
No - again - a change in the price of an item does not change demand - it may reduce the amount of units sold. And in the case of Subway, yes, you're right, probably they will sell a few less sandwiches. But how many fewer is the key question, and how does it impact their business. It depends.
========= "Assuming you are talking about the US, "
I'm talking about everywhere.
Everywhere in the world, healthcare is treated differently from most other business sectors. Everything - drugs, materials, pricing, publications, communications (what you can say in an ad), what you can advertise, how you are allowed to bill - even in some cases that you must provide service to some people even if they cannot pay (!) - this is due to the asymetry in the system where providers have the power of life and death over customers.
In many countries, including the US, Hospitals cannot turn away patients and must treat in some cases, no matter what. Think about it: imagine if the US Gov told Ford and GM that they have to 'give a car' to people if they camp outside the dealership.
FYI here is 'supply and demand' [1] to help you with your understanding of what happens when prices change (demand does not change, possibly the amount of goods purchased does)
> Changing the price of a good does not 'decrease demand'. It changes the supply curve - and given an identical 'demand curve' (aka demand does not change), there may end up being less consumption of that good.
Demand means the amount of a product or service that people want. Increasing the price of something does reduce the demand for it (and increases the supply).
> this is even worse than wrong, I don't know what to say at this point.
This is puzzling and I think you misread what I wrote. An employee bringing in less in revenue than they are paid is an unsustainable situation.
> no, they can't replace with cheaper workers - because of minimum wage
They can replace the workers with fewer more experienced ones who will be able to command the higher wage.
> A wage increase means the money has to come from somewhere
It does come from somewhere: fewer hired workers. If you raise the price of oranges, you will sell fewer. Setting a price floor on labor is no different.
> It depends.
No, it doesn't. Employers try to pay employees as little as they can and employees try to earn as much as they can. When an employer feels they're not getting enough for their money, they replace them. When an employee feels that they aren't compensated enough, they find another job. "Labor" is too generic to make claims about elasticity of demand–some types of labor may be elastic, others inelastic, but minimum wage laws do not discriminate. In addition, there is always a ceiling where supply and demand become irrelevant: the revenue added by hiring a worker must be higher than their wage. If a new price floor is higher than what an employee is able to bring in in revenue, that employee will not remain employed.
> I know what you are trying to say
[...]
> FYI here is 'supply and demand' [1]
It seems you have mostly grasped the concept of supply and demand, but are applying it very crudely without context.
First - your definition of 'demand' is 'completely wrong' and totally at odds with the entire field of economics - even the schools that traditionally disagree with one another.
'Demand' is a function of 'how much people are willing to pay for stuff, and at what price'.
The 'supply' of something is how much suppliers will sell, at what prices.
A change in the supply curve (the cost of something) does not change demand.
It does change much of the item will be sold for, aka the 'market clearing price' - which I think you are confusing with 'demand'.
Please have a closer look the 'Supply and Demand' Wiki entry I referenced.
As for the rest of your thesis:
You're trying to rigidly apply concepts of Supply and Demand in 1) theoretical contexts, which do not exist in reality and 2) you are ignoring the fact that Supply and Demand for goods (like labour) are balanced with other forces, which always alters the equation.
For example, in the case of higher minimum wage:
"They can replace the workers with fewer more experienced ones who will be able to command the higher wage."
It is a 'rigid assumption' that corporations would simply try keep their labour costs consistent.
While it's possible they could do this, 1) there are any number of other things the could do, and2) in reality, they probably won't do that at all, because this idea that an increase in labour cost will materially result in better workers is false.
'Paying 5% more will get workers who work 5% better so we can then reduce employment by 5%' is a fallacious equivocation. There's no real situation in which that equation holds, even theoretically that does not generally hold true.
In reality, any company that 'hires fewer people' (even with a bit of a wage increase) probably will have less output, therefore less revenues - which changes a lot of things.
A company could increase it's prices, while theoretically that might reduce unit sales, it may or may not yield a better situation depending on what the curve looks like.
'Profit' matters, because that's what sets the internal 'demand curve' for labour. In a highly profitable company, the most efficient solution to a wage hike may simply to do nothing, and just pay them more out of profits. That could very well be the 'rational self interest' response which maximizes profits after that wage adjustment.
But all of that is pedantic because nothing in the real world works that way, there are always other variables.
Subway is not selling 'widgets' that buyers have a perfect understanding of, and none of these markets operate efficiently.
They could reduce the size of their meat patties - and customers may be none the wiser and therefore consume just as much (which would result in suppliers getting paid less).
They could raise prices in conjunction with a smart marketing campaign that encouraged people to buy in the same quantities even at higher prices (result is customers paying more).
They could somehow have better morale and more enthused workers who just had better output.
They could do financing restructure and get better terms from the bank (again, supplier paying the price).
They could 'dock the overzealous executive pay programs' for performance failures (executives pay the price).
Finally there are big unknowns/risks and issues with time (aka upgrading tooling to increase efficiency maybe has a long time horizon). I hinted at that with marketing, but the same applies to product, process, market conditions and every other aspect of the business.
I don't care what you think demand means, you already said you know what I mean and you keep being obtuse about it. I'm not moving demand and supply curves, I'm saying if the price of oranges goes up, some people are gonna substitute them with apples. Yes, some people are gonna keep buying oranges anyway because they value them at more than what the price increase is at. But overall fewer people will buy oranges.
You keep giving specific examples of where employers might keep employees even if they have to pay them more, maybe to convince yourself that this is a complicated issue. I didn't say all minimum wage employees lose their job when the minimum wage rises. But there are fewer jobs. This isn't complex, there isn't a special nuance that requires a PhD in economics and an MBA to understand. Some employees are barely worth it at the current price to some employers and not worth it at a higher price. Minimum wage laws don't magically make employers value employees more.
The effects of minimum wage laws are visible. Increased unemployment, primarily for teenagers and young adults, automation, and outsourcing are commonplace everywhere with minimum wage laws.
I hate to break it to you, but this is completely wrong, I was being polite before, I'm being more direct now.
I know what you are trying to say, but you're using the wrong language, which is maybe an indication of the lack of understanding of the the underlying micro econ in this statement.
Changing the price of a good does not 'decrease demand'. It changes the supply curve - and given an identical 'demand curve' (aka demand does not change), there may end up being less consumption of that good.
But it also depends entirely on other factors, which I explained.
======== "If you're earning your employer $10/h and the minimum wage rises to $11, you will not have a job. Either right away if the employer realizes it, or eventually when they go out of business if they don't."
No - again, this is even worse than wrong, I don't know what to say at this point.
To put it in simple terms, wage changes happen all of the time, and even minimum wage is increased without necessarily affecting jobs.
In short, if minimum wage at Subway sandwiches go up from $14 to $15 - more than likely we'll see prices go up a bit, profits go down a bit, and probably not a change of employment.
(And again, the price of wages does not affect demand, it affects supply)
========= "Profits have nothing to do with it. "
"If a business has employees at some wage and the minimum wage rises above that wage, they will, at least eventually, replace the low-wage employees with new ones"
Ok, now either you're trolling, or you really are having a hard time understanding the basics of finance, economics or business here.
Yes, if an input cost is raised, then a business will adjust. You are correct to suggest they will likely 'do something'.
But what are their options: 1) 'Replacement' - no, they can't replace with cheaper workers - because of minimum wage 2) 'Automation' - ok, but what 'automation'? And at what cost? Do you think there are magic robots waiting to replace workers at Subway? Now, there definitely are a lot of new technologies, but, Subway is looking at that new tech irrespective of what 'minimum wage' is.
And profits have everything to do with it. A wage increase means the money has to come from somewhere: higher prices, lower output to suppliers, or profits. Subway sandwiches, faced with this dilemma - has to make a choice. It may be more rational to simply have less profits.
Now, as you hint, there may be no room for manoeuvre - maybe there is 'no way out' and Subway sandwiches is going to go bankrupt. That could happen, but in most cases, not.
========= "Otherwise, prices may rise. Not without an associated drop in demand."
No - again - a change in the price of an item does not change demand - it may reduce the amount of units sold. And in the case of Subway, yes, you're right, probably they will sell a few less sandwiches. But how many fewer is the key question, and how does it impact their business. It depends.
========= "Assuming you are talking about the US, "
I'm talking about everywhere.
Everywhere in the world, healthcare is treated differently from most other business sectors. Everything - drugs, materials, pricing, publications, communications (what you can say in an ad), what you can advertise, how you are allowed to bill - even in some cases that you must provide service to some people even if they cannot pay (!) - this is due to the asymetry in the system where providers have the power of life and death over customers.
In many countries, including the US, Hospitals cannot turn away patients and must treat in some cases, no matter what. Think about it: imagine if the US Gov told Ford and GM that they have to 'give a car' to people if they camp outside the dealership.
FYI here is 'supply and demand' [1] to help you with your understanding of what happens when prices change (demand does not change, possibly the amount of goods purchased does)
[1] https://en.wikipedia.org/wiki/Supply_and_demand