Recent Updated #13

This blog post is going to be focused around a recent article I read on The Economist titled, “Employee happiness and business success are linked”. This addressed a fascinating topic, and one that was discussed several times in many of my economic courses. The idea behind this is clearly stated and that is: businesses do better and ultimately make more money when their staff is happier. If you think about it, this makes a lot of sense. Employees are the backbone of any company. If someone’s employees are not treated well, it could lead to disrespect, slacking off, violating company rules, and more. Therefore, it is crucial for employees to be happy working to succeed.

I can speak from personal experience and say that at all the jobs I have held, when my boss gives me the freedom to make my own decisions and is respectful and kind, I have been much more inclined to put my best effort forth and do everything correctly because I respected and enjoyed working for my employer. This just simply makes sense.

In the previously mentioned article, it discusses a study done by Christian Krekel, George Ward and Jan-Emmanuel de Neve. The authors used Gallup and studied nearly 1.9m employees across 230 separate organizations in 73 countries. The variables they studied were: customer loyalty, employee productivity, profitability and staff turnover. They ended up concluding that there was a positive correlation between employee satisfaction and customer loyalty, which shows that when employees are happy, customers return. It also found a negative correlation between employee satisfaction and staff turnover, which of course means that when employees are more satisfied, they are less likely to leave their jobs. This saves money and time for employers as they will not have to hire and retrain new employees frequently.

The article then referenced the Human Relations Theory. This theory, in summary, says that higher employee satisfaction leads to higher productivity. In the end, high productivity is what every company strives for. It leads to more efficiency in a company and ultimately, more money. Therefore, I agree with the ideas in this article that treating employees well is extremely beneficial to success. Like previously stated and as most people could agree, working for a respectful company pushes you to work to the best of your ability.

Source:

Employee Happiness and Business Success Are Linked. 2019. The Economist, The Economist Newspaper, www.economist.com/business/2019/07/28/employee-happiness-and-business-success-are-linked.

Recent Updates #12

 

A few days ago, a much-debated economic topic was addressed in the Democratic House. The fight to raise the minimum wage to $15/hour, rather than the federal minimum of $7.25/hour, is being discussed and the bill was actually passed in the Democratic-controlled House. To find more information on this discussion, I utilized an article titled, “Economics in Brief: ‘Raise the Wage’ Act Passes in the House”, on Next City. This topic is a major focus of the Democratic Party and is something they are fighting strongly for. The last time the minimum wage was changed was in 2009; however, there may be a good reason for this.

According to the previously mentioned article, “…if passed, the legislation would boost the earnings of 27.3 million workers but lead to 1.3 million lost jobs”. That is the major problem here.

It may be a nice idea that everyone be paid more and have more money in their pockets for leisure spending; however, this comes with an unexpected price. In my studies at Duquesne University, the minimum wage was analyzed in depth and in the rest of the blog post, I would like to discuss the hidden problems with a higher minimum wage, not that I am entirely against it.

If employers must pay their employees more, this causes them to either stop employing more people, lay off employees because they cannot afford the higher prices, or go out of business due to the higher cost of operating. This, like the article pointed out, causes people to lose their jobs and makes it harder to find a job because employers are on a stricter budget. This does the opposite of grow the economy because the unemployment rate will most definitely go up. Also, not to mention the people who have just entered the job market not being able to find jobs because they lack experience and employers will not be inclined to hire new, inexperienced, people.

There is also another obvious con to this bill and that is that if people are being paid more, the standard of living will most definitely go up with it. These two things have a direct relationship. The more money people make; the more expensive things become to balance everything in the economy out. This is because employers will increase prices to make up for having to pay their employees more. Therefore, ultimately, the pay increase will not do much for anyone if the prices of things go up at the same rate.

All in all, there are some definite pros to the minimum wage being increased; however, it is also important to look at the cons as well because there are quite a few.

Source:

Economics in Brief: 'Raise the Wage' Act Passes in the House. 2019. Next City, Next City, nextcity.org/daily/entry/economics-in-brief-raise-the-wage-act-passes-in-the-house.

Recent Updates #11

In a past blog post, I discussed President Trump’s use of tariffs when dealing with China and the impact that doing so has on trade. It seems as though these trade wars are now spreading between other countries as well.

According to an article by the Economist, titled, “A trade dispute between Japan and South Korea has Trumpian echoes”, it discusses the past and present trade issues going on between these two Asian countries. The article states that tensions began a very long time ago due to Japan’s colonization of Korea.

More recently, on July 4^th, Japan began putting restrictions on exports to South Korea on certain chemicals. The chemicals included are:  fluorinated polyimide, photoresists and hydrogen fluoride. Apparently, Japan produces roughly 90% of global production of these chemicals. These chemicals are specifically used to make memory chips for a ton of electronics. This is the main problem. South Korea is, in fact, the biggest manufacturer of memory chips, so placing restrictions on exports would negatively impact the entire world and many other supply chains outside of just these two countries.

In another article on BBC News, titled, “How Japan's trade row with South Korea could hit tech supplies”, it states, “The moves have drawn anger from South Korea, and earlier this month President Moon Jae-in described the situation as an "unprecedented emergency" for his country's economy” (Harrison). This upcoming Tuesday, the World Trade Organization is going to review these trade restrictions.

Like all relationships between countries, the two must come to an agreement between themselves; however, I cannot help but to think that Trump’s radical protectionist trade policies are making issues like this normal and accepted. Trump is known to use trade weapons to get what he desires from other countries and this is not only unfair, but dangerous. Damaging relationships is terrible for the economy and trade is absolutely necessary for an economy to run and flourish. All in all, I think it is important to recognize that these unfair practices are not going to solve anything, and hopefully the issue between Japan and South Korea is resolved.

Sources:

A Trade Dispute between Japan and South Korea Has Trumpian Echoes. 2019. The Economist, The Economist Newspaper, www.economist.com/leaders/2019/07/18/a-trade-dispute-between-japan-and-south-korea-has-trumpian-echoes.

Harrison, Virginia. How Japan's Trade Row with South Korea Could Hit Tech Supplies. 2019. BBC News, BBC, www.bbc.com/news/business-49041285.