[dangus]

It’s this already debunked by the famous Danish McDonald’s example?

This is also debunked simple napkin math, even if the napkin math is generous to skeptics.

Let’s say you buy a product for $100 with these example costs:

$30 of the price goes to labor

$30 of the price goes to rent/utilities/“keeping the lights on”

$30 of the price goes to inputs (materials)

$10 of the price goes to profit.

Let’s say wages go up by 20%.

Labor goes up to $36, now your price is $106.

Wages went up by 20% but your price went up by 6%.

Maybe we have to add the labor of the input materials, but a lot of input materials have low labor costs than finished products in the restaurant industry. E.g., a tortilla from a tortilla factory doesn’t have 30% of its price represented by labor cost, since it’s made on an automated assembly line. Still, for ease, let’s just say our input materials went up by ~6% to $32

At the end of the day your total cost of your product went up 8% but all the employees got a massive 20% raise with net positive income.

[add-sub-mul-div]

This is really disingenuous and doesn't debunk anything. Who claimed that wages going up 20% would raise the overall price of the product 20%? I'm sure you can find someone on Twitter who said that because you can find any dumb thing on Twitter, but it's not a main argument.

It's obvious to everyone that labor is just one cost to the seller. People only care that the price went up $6, not how that $6 happens to break down for the seller.

[dangus]

I disagree with your last paragraph. This math is not obvious to most laypeople.

Many people think that if a McDonald’s worker’s salary goes from $10 to $20 that their Big Mac will go from $4 to $8.

My napkin math is extremely generous to minimum wage haters. It assumes that everyone is getting a raise and therefore all costs of all goods are going up. It also assumes basically a worst case scenario restaurant industry wage breakdown.

For example, the S&P 500’s average labor cost as a percentage of revenue is only 12%.

I haven’t even brought up the fact that people making wages that are too low to survive on already use government benefit programs, like how Walmart is the largest employer consumer of food stamps in the country. Minimum wage could be one mechanism among others to reduce corporate welfare. Walmart doesn’t deserve to have its labor costs be subsidized by the taxpayer.

[add-sub-mul-div]

You can imagine a person who thinks McDonalds' only cost for making a hamburger is the labor and they get the beef and bread for free. But hopefully there aren't many of those people.

And it's a distraction from the main point. Without needing to look at any specific math, higher labor costs will be generally passed onto the customer because profit is not allowed to go down. That's not a defense of low wages, it's just an illustration of where the power lies.

[dangus]

Cost go up, wage go up more.

[Aloisius]

And what about price increases because people can now afford to pay more for the same product?

[dangus]

Prices don’t just magically go up that way?

If I live in India the PlayStation 5 isn’t magically price reduced to $100 just because my income is lower. Similarly, it doesn’t magically become $5,000 if I live in Monaco.

[Aloisius]

Depends on what we're talking about.

A PS5 is sold globally and subject to arbitrage. If someone from Monaco can easily purchase a PS5 from India for $4500 less, they or a reseller, likely will, preventing that level of price discrimination.

A game only sold on Steam so there's essentially no competition? Regional pricing based on what the market will bear is common. People in India actually do pay a whole lot less for the exact same game on Steam than someone in say, the US.

Locally purchased goods/services are somewhere in between, but the less price sensitive customers are, the less likely they're going to shop around for a deal effectively reducing price competition between businesses on the low end at least (people will still travel 60 miles to save $2000 on a $40,000 car even if they won't go two blocks to save $1.00 on a $5 carton of eggs).