Topic: Is increase in minimum wage a good method to fight inflation? - page 8. (Read 2015 times)

Salary increases are not carried out by recipients but wage earners, in fact, the government will usually try to protect entrepreneurs by increasing the minimum wage following the wishes of entrepreneurs so it is clear that wage increases will not be able to beat inflation unless we as wage earners try harder to get additional income to invest in the future. so we can beat inflation, but not by spending it now but for the future when the investment has provided large profits which we can also use to return to other investments, compound is the key.

just broad raising minimum wage rate nationally. effects business costs that effect product prices that effect peoples spending costs. causing a circular cycle of then needing to repeat. which is outside of businesses control..

however businesses raising employees pay if the business sees the employees effort/efficiency. where by getting back to a "hard work=higher pay" model that benefits business and employee

Yes, definitely, and not just increasing the minimum wage, but the benefits also, in terms of leaves and other things, because taking care of the welfare of employees is as important as a good salary. Because of the continued increase in the inflation rate in the world, increasing the wage of an employee will boost their mood and also increase their productivity at work. This will have good benefits for both the employee and the employer. It can be an easy move in the private sector, but for public or government-based work, increasing the minimum wage will be very hard as there are only allocated budgets for that, but at least the government and public sectors have a lot of benefits.

But let's be real, increasing the minimum wage is a very hard movement for any sector as all the costs are increasing along with the inflation rate, so yeah, I hope they make more minimum wage increases.

increasing the minimum wage causes inflation ripple effect.

however offering employees same pay, but with added benefits like discounts with partnering businesses, extra vacations, sickdays(without question EG "mental health days"), or pension contribution matching.
these side benefits can become corporation write-offs for corporation tax purposes thus benefitting the company too.. thus benefiting the employee and employer without raising costs for both

lets dig deeper
lets use vacation days
many think offering vacation days means a business needs to hire more people, or pay other employees for over time to fill in the gap.. however this can be done differently.
such as allowing the employees to secondary market their own vacation days.
that way one employee can gain a extra few days off while the other employee in the deal gets over-time. where these trades are done within the employee pool, instead of the management. thus no extra cost for the business, thus no affect on cost of goods

things like, management can pro-rata employee contributions/production efficiency to the business.
say a employee is suppose to achieve a quote of 2400 items a year(10 per workday(240 workdays)). if an employee manages 2400 in just 235 days. a company could award them 5 days vacation without affecting production rate. which due to being a "free bonus" the employee can give/sell to someone else. thus increase pay if sold, whereby someone else gets the extra vacation days off

..
problems do arise however when minimal effort, inefficient, dead-wood employees expect promotions, benefits, rewards, for not putting in the effort. whereby it starts costing businesses money. whereby it also ruins the incentives schemes to no longer energise employees to work if the dead-wood guys are getting the same benefits as the efficient hard workers.. EG "equality"

definitely, just increase the supply, make commodities and food prices lesser by keeping the supply plenty then fluctuation can be kept under the alarming rate.
increasing the salary will just normalize the inflation, making people's purchasing power come back to before but its only temporary until the supply plummet and the price rise again.
but even so, its still hard keeping the inflation from rising higher, as we know every year the rate of inlation is always keep on rising.
it just means that even the most advanced, succesfull government out there still having a hard time keeping up with the rate of inflation.
after all, inflation is like natural with current monetary system.

Increasing minimum wage of salary earners cannot solve any inflation problem, in fact it will be a catalyst to inflation if care and price control is not put in place.

I am sure you making reference to our country Nigeria; our economic situation is out of hand and increasing workers salaries will not help the situation out. Increasing minimum wage will just help workers to be able to afford goods and services at inflated rate and not to solve any inflation problem.

If the minimum wages is increased, the price of goods will keep going up as they will feel that workers now have money to buy at any amount, as a result, it will make the rate of inflation more higher than it is now.

No, because it doesn't mean anything on practice. Here in our country the minimum wage was readjusted in 10% this year, but in counterpart the prices of every goods and services increase much more than 10%, so there isn't real increasement in purchasing power. It's quite the opposite, we are losing purchasing power along the years, as inflation is always suppressing minimum wage's readjustments. Actually, increasing minimum wages is a populist measure by governments who know their illiterate population will think consistent gains are being granted to them by the benevolent government.

If governments wished to fight inflation they would stop printing money, besides encouraging education and self-development among their citizens. However, it's not interesting for government to rule a nation of independent people who are able to think by themselves. To rule among sheeps is always more comfortable... Especially when they feel thankful for minimum wage's increasements which don't bring any real benefits at all.

Doesn't the plot thicken here? In its infinite wisdom, the government uses employers to fight inflation. Not a good logic. Immediate aftermath? Companies scramble to adjust, raising prices. The cure causes more inflation. The policy that was supposed to save purchasing power actually weakens it. Instead of shaping economic policy, employers are puppets. The idea that raising salaries will cure inflation is dangerously simplistic. Sustainable economic plans should replace short-term fiscal tactics

Or it can even make things worse. Increase of minimum wage means that bookkeeper will recalculate all salaries and company would pay a higher tax (in our country it is called something like "mandatory social insurance"). Employee would earn a bit more each month, but company will pay a bit more tax. Guess where company going to take that "a bit more tax"? By good/service price increase. Which means again inflation.

Increase of minimum wage to fight inflation is government decision to fight inflation with employers hands. This is totally wrong. Employer is not responsible for decision government take, nor can influence on that, yet he is oblige to solve problems government create.

The purpose of the "minimum wage" are not there to fight inflation, it is implemented to protect the employees from ruthless employers.

You get some employers that will offer a basic salary, but it will be way below the amount that people would be able to make a living. The government stepped in and they determined a minimum wage that must be paid for any employee to protect them againt those employers that wants to put profit before the people that work for them.

Living costs increase every year, so they increase the minimum wage to adapt to the increase in the living cost.

It's not really a good way to fight inflation, I mean it is being controlled by the government so we can't really fight inflation because the government is the one who just keeps on printing money whenever they want so if you use fiat money you surely going to get eaten by the inflation on your country because of the dumb system.

Increasing the minimum wage could be a good thing so that people are able to at least survive with the increasing price of their needs, but it wasn't really some kind of solution since inflation is still going to hit unless they could increase the salary to the point where it can go with the inflation at the same time, which is most likely not going to happen.

We cant really do anything about the inflation it is going to exist and we cant stop it, what we can do is just to do alternatives like putting our money on Gold, real estate, Bitcoin, etc. that is not like fiat money.

fight inflation by stabilizing prices, not increasing employee salaries. because increasing employee salaries only increases people's purchasing power, not reducing inflation or lowering prices. The best way to fight inflation is market operations by meeting people's food needs so that prices are controlled so that inflation is controlled so that it does not rise high.

Increasing the minimum wage above inflation is the right thing to do when the country is not experiencing serious problems. In stark contrast to two years ago, many countries were experiencing serious problems due to the Covid virus problem. so that people are aware and understand that the economy is in decline and everyone is experiencing problems in the financial sector, including companies.

So it is unfair if the current minimum wage increase is above inflation. All governments are aware that this will be detrimental to companies so that in the end many will go bankrupt if there is an increase in the minimum wage or many companies will carry out massive layoffs because they cannot afford to pay employee salaries. Besides, when the minimum wage is increased, it doesn't have much of an effect because the prices of basic commodities also increase, you could say it's the same. So the conclusion is that increasing salaries during inflation is not a solution to fight inflation, but this is only to reduce pressure on employees who are affected by the increase in goods due to inflation.

Yes, to be more precise, increasing wages is able to mitigate the impact of inflation itself so that the economy can turn around at the social level.  As you said, the impact of inflation can occur due to the scarcity of a good or commodity. This cannot be said to fight inflation but rather help alleviate the impact that occurs.

If it is such a good system, how is it that Venezuela is the country in the world that has raised the minimum wage the most and is in ruins?

The only way it is useful to raise the minimum wage is if the country is productive, is rich, and can cushion the bad effect. What happens is the opposite of what you describe, which is what leftists usually defend: instead of stimulating the economy with this increase, what you do is to generate inflation, and in most cases based on debt, a debt that the state will have to repay with interest.

What happens after a year of raising the minimum wage? It has to be raised again because people in real terms are poorer than before the increase a year ago.

In other words, it is a shitty "solution".

The minimum wage is not really a way to fight inflation and instead it is just a way to set a floor to the pay businesses can give to their employees.

If a government tried to use the minimum wage to fight inflation, businesses will react to this by lowering the hours each employee works for them or by firing several of their employees and ask the rest to do more for their new and higher salary, which will create unemployment and will aggravate the situation of all of those people.

Minimum wage increments is not and will never be a method of fighting inflation it’s a helpless plunge by the government to ease inflation, It only ends up causing more inflation there are methods that have proven effective like reduced importations and increased exports, reduction of salaries of high level government officials and also reducing expenditure this all depends on your nation’s population man power and technical knowledge,
With the right strategy and implementations inflation can be controlled and also extinguished.

Focusing only on specific areas like food can cause prices of other products and services to increase. This can lead to an imbalance in the economy. A better solution would be for the government to create a more comprehensive plan or to reduce their spending. They could also increase taxes to discourage excessive spending by individuals.

check any retail good. look at the manufacturer. look at the investors of product manufacturing.
and you see the same couple main investors
take pepsi, Kellogs:
vanguard
blackrock

take coca-cola, Kraft:
Berkshire Hathaway
blackrock

vanguard, blackrock, and BH want to make stock market profits, so companies selling food and drink need to make profits, so prices need to go up to keep investors happy

While I agree with the sentiment -- both regarding how wealth should be taxed after a certain limit and how inflation is at this point co-opted/weaponized to reallocate capital to the top -- I'm not quite sure how taxing the wealthy in itself would help fight inflation. By reducing government debt and thus indirectly reducing the money supply maybe, but we all know that's just as likely to happen as the top 1 percent giving up even part of their capital and power.



Prices get raised regardless of whether minimum wages get an increase or not. Sure, they would use it as an excuse for raising prices further, but they will do so regardless.