Raising the Minimum Wage

[Renton]

I think the problem is looking at this like "x number of jobs vs y number of jobs." A job can take many different forms, and can be anywhere along the spectrum from part-time to full-time to overtime. Math says that an increase in the minimum wage reduces employment, but that reduction may just be that people don't get as many hours and are ultimately paid a little less, in spite of the increase. The reduction in employment could also be reported as a reduction in higher paying jobs that is made up for by an increase in minimum wage jobs, so the net amount of income paid out is decreased, and hence the "employment."

Why does labor follow that rule?

Isnt it true that some goods are uneffected by price changes? Because they are necessities? If thats the case, labor could follow that rule instead. Labor is a necessity to business, and gets replaced very quickly when it isnt.

There wasnt a minimum wage during the industrial revolution, yet tons lost jobs as they were replaced by machines. Thats gonna happen again as soon as labor isnt necessary. But the fact is, you cant sell burgers unless you have someone flipping the patties.

Labor is not a necessity. A business can only exist if it is capable of making a profit that, accounting for the ever-present risk of loss, is competitive with other uses of the business owner's time and capital. In other words, yes, he can "simply accept a lower profit margin" down to a certain critical point where he would be better off liquidating his business and buying government bonds with it. So below that critical profit threshold, he doesn't need labor at all.

But businesses have inertia so generally they're going to try to survive under the new conditions. They will generally begin by firing their dead weight, i.e. people who were productive at the old wage but are no longer productive at the high minimum wage (woe to those people btw, who may have no hope finding any job ever). They will have a bit of latitude to increase prices, assuming their competitors have to deal with the same obstacle, so they will do that if they can (woe to those companies that must compete on a regional or global scale with cheaper labor competitors, btw). As basic economics teaches us, an increase in the price of the business's goods or services results in a reduction of the demand for those goods or services, so he will trading at a suboptimal price for creating the amount of demand for his product to support his original business. This may result in downsizing the business, including letting people go and liberating some capital.

In regard to your point about the industrial revolution, I couldn't detect a lamenting tone from your post about those people losing jobs to machines. This is generally an incredibly good thing for society when jobs become obsolete. I'm pretty skeptical of labor being rendered completely unnecessary within the next thousand years or so. There are always more things for humans to do, and the obsolescence generally frees human labor to produce things further up Maslow's pyramid. Maybe in 2200 the most common job in the economy will be video game programmer, who knows.