Behind the minimum wage

Article Abstract:

The Low Pay Commission argues that the British minimum wage has had little impact on employment, and unemployment has dropped while more people are in work, so this may initially appear to be true. It is preferable to assess what would have occurred without a minimum wage, rather than simply assess whether jobs have been lost, since employment growth is linked to another fatcor, economic growth. Companies may spend less on recruiting employees if the minimum wage helps to retain them, so a minimum wage can cut labor costs, though this does not appear to be an important factor. The minimum wage does appear to have affected profits, and there are also many companies that have not complied with minimum wage legislation.

Minimum Wages

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The minimum wage's seven dark secrets

Article Abstract:

The United Kingdom Low Pay Commission is to recommend a minimum wage in May 1998 and there is uncertainty about the impact that this will have on employment. Employment and wages tend to be volatile in occupations with low pay. The impact on profits cannot easily be assessed since a minimum wage may boost efficiency so profits, rather than eroding profits. Employers may welcome a minimum wage if it harms competitors, and this may be especially true of larger firms since smaller firms may go out of business. Minimum wages may cut employer's costs by reducing labor turnover, and they may encourage young people to take paid work rather than study.

Economic policy

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Price rises fuel equity fears

Article Abstract:

There is concern over possible stagflation in the United Kingdom, which would hit stock prices through higher interest rates and lower corporate earnings. Retail price inflation of 4.2% for May 1998 is less of a concern than wage inflation of 5.9% for the private sector in Mar 1998, and 5.2% for wages as a whole. Prices have been pushed up by tax changes and poor weather, affecting food prices. Unemployment may have to rise for some time before the Bank of England ceases to be concerned about inflationary pressures.

Prices, Inflation (Finance), Inflation (Economics)

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