Chapter 8

LINK : http://www.economist.com/finance/displayStory.cfm?story_id=12689737

Summary
The article I’ve chosen is about is about the wages of employees rising. Since the economic recession is happening, workers in Saskatchewan got raises in their average weekly earning. There was data showing that about 439,000 people that worked in non-farm like jobs went up 1.9 percent in their payroll. While the hourly pay rates are going up, it seems like the actual hours of work and overtime are going down. The reason that they made the wages of people’s salaries higher was so that they could promote spending to help the economy. Statistics Canada stated that the biggest job losses were in the fields of manufacturing, construction, truck transportation, and non-internet publishing jobs. However there has been job growth in the fields of health and education employment.

Connection
The article is connected to this chapter because it talks about wage control. Since the wages of jobs have gone up, it will promote more spending. With more of a demand for spending, businesses will raise the prices of their goods. Luckily with the prices of goods going up, the government can put a price ceiling to help protect consumers. The price ceiling will help support the consumers and keep up the demand for goods. Wage control is very commonly used by the government to help restrain the occurrence of inflation. With inflations kept down consumer will be more confident with their spending.

Reflection
I think that by increasing wages of people, it will sooner or later hurt them. The increase of wages can help people now, but after a while the problems will catch up. Since the increases are to promote spending, companies will increase their prices so that consumers will have to pay more then they use to. Price ceilings would help but the prices of products will still go up. with the profits of businesses going up, they will not have to have so many employees so there would be less job opportunities to out there. So in the end there would just be job losses and an increase of goods from businesses.

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