The reasoning being job lossduring the Great Recession combined with higher wages like construction, manufacturing and finance hard, also job growth has is in low-wage industries. This is not a short term trend and the government is showing that to protect its citizens from going below their standard of living, hitting poverty level, more consumers spending and protecting them from employers. The standard of living is different from whomever you may talk to. Setting a minimum wage deriving from ones standard of living has many aspects to it such as; general economic conditions, nominal gross domestic product; inflation labor supply and demand, business operating costs and the number and trend of bankruptcies. Every-one citizen needs to have minimum salary needed to maintain minimum living standard.
The Labour economy policies are also a reason why they lost. Gaitskell promised to increase public spending without increasing taxes. This put his credibility under question. Another reason is that although voters were happy with the nationalisation of electricity, gas, atomic energy and airline industries they thought public ownership of coal and the railways had been a failure when they were last in government and there was little enthusiasm for further nationalisation which Labour was committed to by Clause Four of the Labour Party Constitution. Another reason why Conservatives won is that in there manifesto they promised to stabilise the cost of living which would close the gap between rich and poor and double everyone’s standard of living.
Satoria Mckenzy Principals of Economics (Ref # 380267) Spring 2013 The Full Economic Impact of an Increase in the Minimum Wage Where minimum began - The history of minimum wage, what is minimum wage, the laws of minimum wage. The minimum wage has a strong social appeal, rooted in concern about the ability of markets to provide income equity for the least able members of the work force. For some people, the obvious solution to this concern is to redefine the wage structure politically to achieve a socially preferable distribution of income. Thus, minimum wage laws have usually been judged against the criterion of reducing poverty. Statutory minimum wages were also proposed as a way to control the proliferation of manufacturing industries.
Borrowers who did not meet their standards were forced to pay higher interest rates to subprime lenders, but the companies essentially persuaded investors to treat a vast number American families as if they were interchangeable. They took messy bunches of loans, with risks as variable as snowflakes, and created securities of uniform quality, easy to buy and sell. The result was one of the most popular investment products ever created. And in its absence, experts on housing finance say that fewer borrowers would qualify for the best interest
While some Americans were pouring their money into the economy, the government was doing very little to fix the problems of unemployment. Unemployment rates had increased by the end of 1920. The unequal distribution of wealth and income made the economy very vulnerable. High tariff barriers disabled trade between the United States and other countries. America was forced to extend credit to ever extended nations in order to keep trade alive.
A 2004 study in the Journal of Human Resources by economists William Wascher, Mark Schweitzer and David Neumark determined that lower-wage union workers typically see a boost in employment and earned income following a mandated wage hike. Never mind the corresponding drop in jobs and earned income for nonunion minimum-wage workers. They may have been priced out of the jobs they need, but that is not the union's concern—its members have landed higher wages and reduced competition for jobs. Such considerations are worth keeping in mind when contemplating the president's wage proposal and the fervent Democratic support for similar and often more ambitious measures, such as Iowa Sen. Tom Harkin's bill to raise the minimum wage to $9.80. Labor unions spent an estimated $174 million on the 2012 election, with 91% of the money going to Democrats, according to the Center for Responsive Politics.
However, pensioners will be hit hard because the extra income they earn from saving will have dramatically reduced, making them worse off. On the other hand, savers may leave the pound for better interest rates in other countries (hot money), causing a fall in the demand for the pound. As a result the value of the pound will fall, making exports cheaper and there will be an injection of net exports. In conclusion, the impact of loose monetary policy will be beneficial to the economy because extra consumption and investment will cause AD to increase which will increase economic growth. However, it takes a long time for changes in interest rates to feed through to consumption and investment and by then the economy may have gotten worse.
Johnson states, “Common sense suggest that raising the incomes of the poor is more complex than passing a law requiring that wages be increased because then it would be a simply matter to make everyone extremely wealthy by requiring that everyone be paid, say $100 per hour. According to Johnson, the economic analysis of the minimum wage question has not changed much throughout the last fifty years (Johnson). Economists rarely debate the issue among themselves, and “to them the continuing debate by others reflects not the limitation of economic science…but rather indicates that what is known is comprehended by so few, and is so poorly used” (Johnson). Economic analysis suggests that wage rates are like other prices, and are therefore determined by the interaction of buyers and sellers (Johnson). For example, if buyers want to purchase more than sellers want to sell, then buyers will offer a higher price, and price increases will stop only when the price is high enough so that buyers want to purchase only that amount that is available (Johnson).
For this reason, this topic of research is extremely significant as a minimum wage hike is sensitive to the livelihoods of millions and, it questions whether it is a safe political instrument for economic development. Typically, the common textbook argument in economics is that when a minimum wage increase is implemented it impedes the economy by prompting a higher unemployment in the country. However, after scrutinizing the experiments and analysis conducted by economists surrounding this topic, it is proven that this textbook argument is invalid in developed countries, specifically in Canada and the United States. In fact, a minimum wage hike significantly drives consumer spending from increased household income at a cost
Conversely, the United States’ output and employment would suffer and lead to larger increases in interest rates over the long term (Page & Reichling, 2012). Higher interest rates would prove extremely detrimental to the economy. Not only would it stifle growth in general, but it would also increase the amount of money the government would have to spend to service its debt. This would hamper government spending that produces a benefit to the economy. Sequestration offers limited austerity now and could reduce the need for more drastic, Greecelike austerity measures in the