Minimum Wage To Go Up, Are you negatively effected?

N1AK

michaels wrote: »

What a surprise, first day economics course, increase the price of something and demand goes down.

I suppose they cover that just after they confirm everyone already knew that when you increase the supply of money demand for products typically increases. The increase minimum wage may actually increase the demand for coffee even at £1.05. Then we have the additional consequences of the change, impacting things like the cost of welfare for the government; a decrease there may keep other taxes down that would otherwise decrease demand for coffee.

One would also hope they cover price elasticity of demand rather than a rather than your oversimplification. I for one wouldn't buy Krug if it didn't have the inflated price tag to demonstrate how I am better than other people

antrobus

N1AK wrote: »

I suppose they cover that just after they confirm everyone already knew that when you increase the supply of money demand for products typically increases. The increase minimum wage may actually increase the demand for coffee even at £1.05....

Yes, but somebody has to pay the wages. Thus the increase in "money demand" enjoyed by the recipient is exactly matched by the decrease in "money demand" suffered by the payor.

Zero sum game.

mwpt

Is the primary intent here to stoke inflation?

CLAPTON

antrobus wrote: »

Yes, but somebody has to pay the wages. Thus the increase in "money demand" enjoyed by the recipient is exactly matched by the decrease in "money demand" suffered by the payor.

Zero sum game.

Any transfer of money between people could be a zero sum game.
However from a macroeconomic perspective, there is a different propensity to spend the money: so 'giving' money to poorer people may increase overall demand in the economy compared to richer people saving it.
However, in this case I guess the real transfer is from taxpayers (the government) to businesses / profit.
Additional we don't know how many jobs will be lost.

antrobus

CLAPTON wrote: »

..However from a macroeconomic perspective, there is a different propensity to spend the money: so 'giving' money to poorer people may increase overall demand in the economy compared to richer people saving it.....

No.

Savings equals investment, and investment spending is just as much part of aggregate demand as is consumption spending.

CLAPTON

antrobus wrote: »

No.

Savings equals investment, and investment spending is just as much part of aggregate demand as is consumption spending.

if by savings you mean the money I keep under my bed then indeed savings does equal investment
and if you mean by investment those never likely to be sold stock item then again yes

however if you mean giving money to poor people who will spend it rather than giving it to rich people who wont, then no.

antrobus

CLAPTON wrote: »

if by savings you mean the money I keep under my bed then indeed savings does equal investment
and if you mean by investment those never likely to be sold stock item then again yes

however if you mean giving money to poor people who will spend it rather than giving it to rich people who wont, then no.

Economics 101; AD = C + I + G + (X – M)

Or aggregate demand equals consumption spending plus investment spending plus government spending plus exports less imports

N1AK

antrobus wrote: »

Yes, but somebody has to pay the wages. Thus the increase in "money demand" enjoyed by the recipient is exactly matched by the decrease in "money demand" suffered by the payor.

Zero sum game.

In which case, if you are correct, you're saying that michaels' assertion that the change would decrease demand is incorrect as the changes cancel out.

I'm not at all persuaded that changes in as complex a system as this can be assumed to be a zero sum game especially in such a narrow area as coffee pricing and demand.

CLAPTON

antrobus wrote: »

Economics 101; AD = C + I + G + (X – M)

Or aggregate demand equals consumption spending plus investment spending plus government spending plus exports less imports

that is EXACTLY what I said.
except of course the word savings and investment do not have their 'normal' meaning

duchy

If a company is in such a poor state financially that paying minimum wage would destroy the company then the obvious question has to be asked- Is the company sustainable and should they even remain in existence.

Might sound harsh but most people would prefer to work for a company who are financially stable. It's not as if these new minimum wage levels have come as a surprise- companies have had ample time to plan for them yet there seem to be a lot of companies acting as it has come as a big surprise !!

Clifford_Pope wrote: »

We will be affected as a small company employing 10 people.
There are 4 pay scales. All new starters are paid the minimum wage, and after satisfactory probation progress up the scales according to ability, experience, etc.

The new NLW is 10% higher. We can't afford to give everyone a 10% pay rise in order to preserve differentials, so in future we shall reduce staff levels and only have two grades - starters and really skilled people. There will in future be no openings for anyone in between - it will be high skill/output only.

Is this what the government intended - fewer jobs?