Minimum Wage To Go Up, Are you negatively effected?

N1AK

mwpt wrote: »

Is the primary intent here to stoke inflation?

I'm pretty sure the primary intent here was for the conservatives to cut the legs out from under Labour by offering a more generous minimum wage than they were.

There's no reason to expect this change to have a large impact on pricing, and thus inflation. As we've been discussing coffee-shops, if you consider it in that context wages are only one of a considerable number of other costs (rent, utilities, product, franchise fees...), not all staff earn minimum wage, and their wages would have likely increased by some amount any way. The additional income is likely to decrease the amount of welfare workers receive, and thus mitigate the need for some amount of alternative tax or spending cuts.

If the intent was to stoke inflation then whomever intended that picked a very poor way of doing it.

CLAPTON

duchy wrote: »

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 !!

better people be unemployed than working for start up companies on a tight budget.

antrobus

CLAPTON wrote: »

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

No, it isn't. You said that 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".

The fact that AD = C + I + G + (X – M) means that the 'propensity to spend' on consumption has no bearing on aggregate demand.

antrobus

N1AK wrote: »

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.

I'm simply talking about aggregate demand. Moving spending from one person to another has no prima facie effect on total demand. Of course, different people have different spending patterns, so you would still expect there to be changes in demand for specific products or services.

P.S. I haven't taken the time to dissect what michaels's is asserting, and so offer no opinion on that subject.

antrobus

N1AK wrote: »

I'm pretty sure the primary intent here was for the conservatives to cut the legs out from under Labour by offering a more generous minimum wage than they were.....

I'm pretty sure that's the case as well.

Thrugelmir

N1AK wrote: »

I'm pretty sure the primary intent here was for the conservatives to cut the legs out from under Labour by offering a more generous minimum wage than they were.

The real issue is how to dismantle Brown's welfare state. Simply cutting WTC etc was not an option. No need to buy votes.

Jon_B_2

duchy wrote: »

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 !!

Quite the contrary. The government announced it in June. Unless a businesses financial year is starting around now, they might have not had time to adjust their budgets accordingly. An understanding as to how a business works and what budgets are about is required before commenting on these types of threads.

CLAPTON

antrobus wrote: »

I'm simply talking about aggregate demand. Moving spending from one person to another has no prima facie effect on total demand. Of course, different people have different spending patterns, so you would still expect there to be changes in demand for specific products or services.

P.S. I haven't taken the time to dissect what michaels's is asserting, and so offer no opinion on that subject.

stockpiling inventory that may never be sold, does not constitute 'demand'
prospensity to spend does

antrobus

CLAPTON wrote: »

stockpiling inventory that may never be sold, does not constitute 'demand'...

I never said that it did. You are the only person that has even mentioned inventory.

CLAPTON wrote: »

..prospensity to spend does

And the propensity to spend on investment is just as much part of aggregate demand as the propensity to spend on consumption.

princeofpounds

One area this is having a real effect is on elderly care - council tax is going to start rising again this year and most of the extra care budget will now go into staff wages. So I (And probably most of us) are going to be taxed more for no extra output.