Apparently the new higher minimum wage is reducing working hours on offer:
Employers are cutting back hours and hiring less to cope with the rise in the National Living Wage, the boss of one of Britain’s biggest recruiters has said.
James Reed, chief executive of Reed, said April’s 9.8pc increase in minimum wage was already being reflected in hiring patterns.
Mr Reed said: “We have seen some employers changing their behaviour.
“They might be taking on people for shorter periods or fewer hours or fewer of them because of the increasing cost.”
The National Living wage rose from £10.42 to £11.44 last month, while workers under the age of 21 and apprentices were given even larger boosts in relative terms.
Oh well, sigh. Some folks‘ll be out of work on a wage of nothing but elites have been able to ethically posture - so, that’s good.
Now, we’ve had a look before at the minimum wage around here. And again, so let’s not go through all of that again. Instead, let’s just think through this another way.
OK, so wages are a cost of doing something. To keep our model simple we’ll assume there are only the three costs to doing something - the inputs that get transformed into the outputs, the labour to do so and the profits made by the capitalist bastards. We can get more complex but that’s really just dividing up those inputs into those right now, those we amortise over lots of production and so on.
OK. So, wages are forced up above that market clearing rate. What’s going to happen? Or even, what can possibly happen?
The price of the outputs could go up to cover those higher wage costs.
Input prices could be forced lower
Less labour to be employed - this is also raising productivity.
The bastard capitalists make less profit
It’s not obvious to me that there are other alternatives here. If output prices go up then the consumer loses out. Hmm, we don’t want that. Also, if only these prices here go up then demand for those items will fall, less labour is needed - folk lose their jobs.
If input prices are forced lower - by, say, using lower quality goods - then the consumer gets shafted by being presented with shite.
If less labour is employed then clearly some lose hours and or whole jobs. Improving productivity is exactly the same thing - producing the same output with the use of less labour.
The bastard capitalists making less profit might be a good idea. Will be to some of course. But over time that’ll also reduce jobs because there’s this idea of the average profit rate across the economy. If employing low skill labour - the sort that gets minimum wage - now makes less profit then over time capital will not be invested in that sector. Fewer jobs and lost hours.
There’s not really anything else that can happen.
Now, we all know this with minimum wages and there are longer discussions of the economics in the above links. But this doesn’t stop people from just lovin’ that price fixin’:
The soaring cost of doner kebabs has led to growing calls in Germany for a government subsidy programme to keep the inflation-hit dish, one of the country’s favourites, affordable as politicians report it is frequently cited as a concern in doorstep conversations with voters.
Subsidising kebabs……
The far-left Die Linke party has become the latest to seize on the topic, calling, in a proposal it wants to present to parliament, for the introduction of a Dönerpreisbremse or doner kebab price cap, similar to that introduced in some parts of the country to control high rents. It says kebabs are already €10 (£8.60) in some cities, rising from €4 just two years ago.
No! price fixing on kebabs!
The party recommends a €4.90 price cap, and €2.90 for young people, especially those from lower income backgrounds, for whom it argues the dish – thinly sliced grilled meat topped with finely chopped vegetables, garlic or chilli sauce, and cradled in a folded flatbread – is a daily staple.
There’s no Big Kebab out there making excess profits so what do we think is going to happen here? Yep it’ll be input costs driven down. Those who don’t already make their kebabs from minced cat will now do so.
For those who don’t know Die Linke is, effectively, the old commmunist party. The people who price fixed everything in the GDR and thereby turned it into that world famous gastronomic delight.
Seriously folks, don’t fix prices.
They even want to set the price of a kebab by the age of the consumer! That will just generate informal "challenge 25" on kebab sales. Sorry mate, you look a bit too young to come in here.
My employer sent me this email yesterday:
"
Hi Andy
In order for your salary to remain compliant with the National Minimum Wage levels, we will need to reduce your AVC pension contribution to 4.75% with effect from the May pay-run.
You will see this change on your Benefit Options account next week.
Kind Regards
Jo"
There is a cost to this kind of schit. With no intervention i'd have gone from effective £10.83 to £11.08 an hour, 'cos the company which isn't making any money at the moment gave me a 2+% rise, but the new number is illegal.
Mulling over whether to quit.