[TheOtherHobbes]

Big companies can also lower profits.

I know it's a shocking idea, but it is possible.

Sometimes when that happens more money ends up in the local economy and hairdressers etc can charge more and pay more without pricing themselves out of the market.

It's the difference between an optimistic and inclusive economy and a depressive and retentive one which tries to minimise shared opportunity.

[Barrin92]

There's not a lot of big, profitable business in Montana (in fact apparently the largest company in the state has about 10k employees). What you're talking about is monopsony power which yes, can depress wages, but as the article points out Montana has an unemployment rate of 3.8 percent and every sector has labour shortages. It's a tight, competitive labour market, not a loose one.

There is no magic here. If everyone charges more and pays more you have, on aggregate, gained nothing. That's the point, if merely raising nominal wages would make everyone better off we'd have a magic button to solve poverty.

[yarcob]

> If everyone charges more and pays more you have, on aggregate, gained nothing

You would reduce income inequality. People who earn money from labour would now earn more vs. people who earn money from capital gains. It would also incentivise investing into production companies rather than passive investments like real estate.

[koolba]

> It would also incentivise investing into production companies rather than passive investments like real estate.

It would do the opposite. Investments with low to no labor costs would see increased investment as the returns are protected against rising labor costs.

High labor costs also incentivize automation of low level tasks traditional performed by low wage labor. Anybody who’s used a self checkout kiosk knows how that works.

[intended]

Automation is coming anyway. A kiosk costs many many magnitudes lower than even an unpaid human. The unpaid human still has to go to the loo.

This is not an argument to keeping people underpaid.

[bluefirebrand]

Kiosks break down requiring service calls. They need software teams to keep them updated, and a not-insignificant portion of the population still just refuse to engage with them. That's why almost all of the ones you see around in stores have attendants still.

[sokoloff]

How would reducing the profitability of productive companies incentivize investing in them? If I knew this was coming I’d try to move my own investments (time and money) into activities which didn’t require high-priced inputs (like labor) to things which didn’t (like IP and real estate and maybe even crypto).

[prepend]

Actually it increases income inequality. Raising wages affects the lowest wage workers most, the same who are impacted by raising prices. The wealthy and ultra rich don’t benefit from increased wages, aren’t harmed by raised prices, but they earn an income on increased prices so result in higher income.

Think of it as the owner has a percentage of revenue. So prices go up, they make more even if most of it is given as wages. Obviously, firms want to raise prices but are limited by the market because of competition. If everyone must raise prices then the competition element is removed.

[badpun]

How? Higher minimum wages make owning a business less atractive.

[intended]

Minimum wages in America are so low, that an increase in minimum wages goes to spending on consumption goods. This drives economic activity.

Eventually inflation catches up and we are back here again.

To be fair the real issue is the wealth gap.

More money in the hands of poorer people means more money circulation and demand.

Money in rich people’s hands means more investment.

Currently far more is in the hands of rich people so we have incredible amounts of investment dry powder waiting to be deployed, and riskier and less healthy ideas being funded.

Optimum consumption and investment is the ideal way forward, and everyone gets a bigger pie (except the environment)

[mindslight]

> If everyone charges more and pays more you have, on aggregate, gained nothing.

Except for the rampant price inflation in housing, healthcare, education, which has happened over the past few decades. The higher unemployment benefits reflect the actual cost of living. Wages (and service industry prices) rising are unfortunately more of a trailing correction than a leading cause.

[ABeeSea]

>It is a tight competitive labor market

So raise wages enough to convince people to move to Montana.