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.
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.
Back of a fag packet stuff suggests that the 9.8% increase in NMW produces an increase of 8.2% in net wages, and an increase in income tax paid (ignoring NI and anything else) of 12.3%.
The Treasury is quite a bit better off. Reckon they hit on this wheeze really quite some time ago.
Oddly, I did manage to earwig a bit of a conversation amongst the staff in one of the local shops yesterday afternoon. They reckoned they were paying about £50 a month more in tax.
"Improving productivity is exactly the same thing - producing the same output with the use of less labour."
Or less capital, less land or less time. Or select your perm. Less time is interesting, in that with chains of convenience stores being open from 7 'til 10, 15 hours, then (reasons) they might cut those hours by up to 30% giving about 9 hours, or 8am 'til 7 or 8pm.
But the Treasury is better off with two employees earning 100GBP each than one earning 109.8GBP and the other drawing benefits, even if the take per employed person is better in the second case.
That's the trade off, innit? So, what happens if the Treasury's assumptions about how many peeps remain earning and how many end up on benefits turn out to be wrong?
Well put. There is an additional angle here which I wrote about in my most recent Substack post, where I talked about the cost structures of businesses. Recently California imposed a big increase in the minimum wage for workers at a specific group of restaurants in the state, large fast food chains who didn’t make big political contributions to the Governor (exempt were restaurants that baked bread on premises, which coincidently happens to describe one of his biggest donors.)
Although McDonald’s and others are wealthy companies, these chains are mostly franchise operations, so the burden of big cost increases falls upon mom-and-pop operators. Besides the price increases, layoffs, and cutbacks in hours that anyone who understands economics would expect, another response is automation. Ordering is increasingly done at kiosks, and robot experts are designing burger-flippers and assemblers (probably tougher to do with doner kebabs, but Germany has some good engineers.)
Automation can cut labor cost, but labor cost is variable. If business slows down, one can reduce labor input and perhaps survive. Capital cost for automation, e.g., lease payments or debt taken on to buy equipment, is a fixed cost, which is great if business is booming, but a possibly fatal problem in a recession. A burger-flipping machine is not a versatile lathe or drill press. It is machinery with no use outside the industry, so if fast food demand drops, one can’t raise cash by selling off excess equipment because the only potential buyers have too much capacity as well.
Expect many bankruptcies ahead, but don’t expect politicians to learn anything.
Link to my post: https://economicsreimagined.substack.com/p/that-old-cost-magic In it I also talk about something bigger that is turning the cost structures of all businesses and even non-profits into more risky fixed-cost operations, i.e., having to add staff and get legal advice to comply with multiplying regulations.
Ah, good, I can link to that then. For there will be a pievce next week on this very subject - making a different point. So, I'll not have to rewrite all that you've done.
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.
1 The price of the outputs could go up to cover those higher wage costs.
2 Input prices could be forced lower
3 Less labour to be employed - this is also raising productivity.
4 The bastard capitalists make less profit
2 Could be split 3 ways (to Geolibertarian me)
a lower ground rent
b lower wages for those supplying goods
c lower quality substitution.
2 could also be seen as 4 but applying to the suppliers.
BTW it sounds like the communists are trying to buy the vote of the low productivity migrants subsidised into Germany
Back of a fag packet stuff suggests that the 9.8% increase in NMW produces an increase of 8.2% in net wages, and an increase in income tax paid (ignoring NI and anything else) of 12.3%.
The Treasury is quite a bit better off. Reckon they hit on this wheeze really quite some time ago.
Oddly, I did manage to earwig a bit of a conversation amongst the staff in one of the local shops yesterday afternoon. They reckoned they were paying about £50 a month more in tax.
"Improving productivity is exactly the same thing - producing the same output with the use of less labour."
Or less capital, less land or less time. Or select your perm. Less time is interesting, in that with chains of convenience stores being open from 7 'til 10, 15 hours, then (reasons) they might cut those hours by up to 30% giving about 9 hours, or 8am 'til 7 or 8pm.
But the Treasury is better off with two employees earning 100GBP each than one earning 109.8GBP and the other drawing benefits, even if the take per employed person is better in the second case.
That's the trade off, innit? So, what happens if the Treasury's assumptions about how many peeps remain earning and how many end up on benefits turn out to be wrong?
Well put. There is an additional angle here which I wrote about in my most recent Substack post, where I talked about the cost structures of businesses. Recently California imposed a big increase in the minimum wage for workers at a specific group of restaurants in the state, large fast food chains who didn’t make big political contributions to the Governor (exempt were restaurants that baked bread on premises, which coincidently happens to describe one of his biggest donors.)
Although McDonald’s and others are wealthy companies, these chains are mostly franchise operations, so the burden of big cost increases falls upon mom-and-pop operators. Besides the price increases, layoffs, and cutbacks in hours that anyone who understands economics would expect, another response is automation. Ordering is increasingly done at kiosks, and robot experts are designing burger-flippers and assemblers (probably tougher to do with doner kebabs, but Germany has some good engineers.)
Automation can cut labor cost, but labor cost is variable. If business slows down, one can reduce labor input and perhaps survive. Capital cost for automation, e.g., lease payments or debt taken on to buy equipment, is a fixed cost, which is great if business is booming, but a possibly fatal problem in a recession. A burger-flipping machine is not a versatile lathe or drill press. It is machinery with no use outside the industry, so if fast food demand drops, one can’t raise cash by selling off excess equipment because the only potential buyers have too much capacity as well.
Expect many bankruptcies ahead, but don’t expect politicians to learn anything.
Link to my post: https://economicsreimagined.substack.com/p/that-old-cost-magic In it I also talk about something bigger that is turning the cost structures of all businesses and even non-profits into more risky fixed-cost operations, i.e., having to add staff and get legal advice to comply with multiplying regulations.
Rick: there are *already* hot burger vending machines in Japan.
At least in the Future there will be places for Stainless Steel Rats to hide out.
Ah, good, I can link to that then. For there will be a pievce next week on this very subject - making a different point. So, I'll not have to rewrite all that you've done.