Can some one come and explain the rise in pay causes inflation …

Coffeehousejunkie · 2022-10-07T07:34:43+00:00

I’ve name changed incase I get hammered 🥴 So I’ve probably got it all wrong but it’s worrying me. I own my own business, August we took a bit of a nose dive, September the wheels fell off. We seen a huge difference in clients. It was a ^bad^ month and it looks like we are set to go through it again. The high street my businesses on is dead. My business is classed as a luxury not necessity. I’ve not took a full wage to protect the business account. It wasn’t a big wage by any standards but enough to be able to go for for a meal ect, pay bills. If it carries on I’ll have to let go a member of staff Ive read that a rise in wages causes inflation and inflation is linked to recession. Im genuinely worried that the constant striking and demanding of wage rises is going to force us in to recession and it’s us small businesses are going to suffer, we are already feeling the squeeze now. I understand people want paying more but can’t they just hang on till we are out of this mess?

RNBrie · 07/10/2022 08:45

Cost of living is rising due to factors outside of people's control - rising energy costs due to Ukranian war and other factors, supply chain issues due to covid lock downs in China etc.

So with costs rising, people need pay rises to continue to afford to heat their homes and put food on the table.

Companies who give their staff pay rises then need to raise the costs of the services or products they sell to cover the increase in wages and other increases.

So then everything gets more expensive and people need another pay rise to keep their heads above water.

Some people might be able to hang on but the majority of people don't have surplus cash to cover the huge increase in energy and mortgage costs plus food etc getting more expensive.

I really hope your business survives

Original poster

Coffeehousejunkie · 07/10/2022 08:55

RNBrie · 07/10/2022 08:45

Cost of living is rising due to factors outside of people's control - rising energy costs due to Ukranian war and other factors, supply chain issues due to covid lock downs in China etc.

So with costs rising, people need pay rises to continue to afford to heat their homes and put food on the table.

Companies who give their staff pay rises then need to raise the costs of the services or products they sell to cover the increase in wages and other increases.

So then everything gets more expensive and people need another pay rise to keep their heads above water.

Some people might be able to hang on but the majority of people don't have surplus cash to cover the huge increase in energy and mortgage costs plus food etc getting more expensive.

I really hope your business survives

Thank you for explaining that. And thanks so do I 🙏🏻

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Damnautocorrect · 07/10/2022 09:01

I hope your business is ok too and your able to hang on to staff.

the grey area is larger businesses who are still pulling in mega profits, or expecting to pull in mega profits. Insisting on giving CEO’s or shareholders massive pay outs whilst also not giving pay rises to workers. That’s partly why there’s strikes, because of the massive disparity in no pay rise for the lower workers, yet higher management and share holders still getting theirs.

Shortjanet · 07/10/2022 09:09

I'd have thought the biggest danger to many businesses at the moment is if people don't get pay rises. Inflation is being driven by other factors surely which limits everyone's ability to pay for goods and services. As a family our discretionary spending budget has fallen off a cliff. That's money no longer going to local restaurants, retail etc.

Original poster

Coffeehousejunkie · 07/10/2022 09:34

Damnautocorrect · 07/10/2022 09:01

I hope your business is ok too and your able to hang on to staff.

the grey area is larger businesses who are still pulling in mega profits, or expecting to pull in mega profits. Insisting on giving CEO’s or shareholders massive pay outs whilst also not giving pay rises to workers. That’s partly why there’s strikes, because of the massive disparity in no pay rise for the lower workers, yet higher management and share holders still getting theirs.

That doesn’t surprise me at all. Yet as usual it’s us plebs that will suffer.

Thank you ☕️

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Damnautocorrect · 07/10/2022 09:42

The channel 5 program 1978 winter of discontent was on the other night and is really good, all scarily relevant for what’s happening now

Original poster

Coffeehousejunkie · 07/10/2022 09:47

Damnautocorrect · 07/10/2022 09:42

The channel 5 program 1978 winter of discontent was on the other night and is really good, all scarily relevant for what’s happening now

I’ll see if I can find it thanks

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Labraradabrador · 07/10/2022 10:05

There is a mismatch between supply and demand - too many people chasing the same scarce resource causes prices to increase, resulting in fewer people buying because they can’t or won’t pay. Increasing wages temporarily increases demand (people keep buying) but because there isn’t enough supply, it triggers further price increases, meaning even on higher wages people can’t afford to keep buying. Runaway inflation is really really ugly, unfortunately the way to keep inflation from taking off (higher interest rates) typically leads to a recession. Most central banks would rather a recession than runaway inflation, as you can have a short recession but inflation creates bigger, longer term challenges that are difficult to address.

for your business, pay increases may help in some respects (more disposable income, in an inflationary economy people are more likely to spend than save) but will hurt in other ways (higher cost of goods, your workers will need/demand higher wages, borrowing costs will increase, etc.).

Original poster

Coffeehousejunkie · 07/10/2022 10:28

Labraradabrador · 07/10/2022 10:05

There is a mismatch between supply and demand - too many people chasing the same scarce resource causes prices to increase, resulting in fewer people buying because they can’t or won’t pay. Increasing wages temporarily increases demand (people keep buying) but because there isn’t enough supply, it triggers further price increases, meaning even on higher wages people can’t afford to keep buying. Runaway inflation is really really ugly, unfortunately the way to keep inflation from taking off (higher interest rates) typically leads to a recession. Most central banks would rather a recession than runaway inflation, as you can have a short recession but inflation creates bigger, longer term challenges that are difficult to address.

for your business, pay increases may help in some respects (more disposable income, in an inflationary economy people are more likely to spend than save) but will hurt in other ways (higher cost of goods, your workers will need/demand higher wages, borrowing costs will increase, etc.).

Nightmare.

My closest competitor has halved their fees so I know it’s not just me. However I really don’t want to have to do that as it’s driving down the quality of the service. I didn’t expect this to happen so quickly

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