Excellent Reflections on Minimum Wage Hikes Backfiring Overseas

Here's an excellent set of Tweets on minimum wages from "Trinh" @Trinhnomics in Hong Kong, on actions taken by S Korea.

> Over the weekend, [South Korean] President Moon doubled down on his income-led strategy even as Koreas higher wages backfire as firms cut back hiring to protect profit margin.

> Why? B/c labor market data is weak after his policy so therefore need to accelerate!

Simple, precise, Accurate

The result should not be unexpected: Approval for South Korea President Moon Hits New Low.

> The approval rating for South Korean President Moon Jae-in has hit a record low amid growing resistance to a recent minimum wage increase.

Curiously a "new low" was 62%. But it was 83% in the first week of May, a week after his summit with North Korean leader Kim Jong Un.

Double Down

Yesterday, Reuters reported South Korea President Moon says government to strengthen income-led growth stance.

> South Korea's chief presidential policy adviser vowed on Sunday to not only stick with but strengthen the government's income-led growth strategy, dismissing increasing calls to ditch the policy following a series of poor economic data.

> Poor employment and household income data released in recent weeks raised concerns that President Moon Jae-in government's push for a sharp minimum wage hike and shorter work hours did more harm than good to Asia's fourth-largest economy.

> "The Moon administration is seeking a paradigm shift in managing the economy, for the first time in decades," Jang said. "The government recognizes the gravity of the recent employment and income index and will do its best to tackle the current situation by employing all policy tools."

Loud and Clear Message

If it doesn't work, double down. That's the universal message from central bankers and politicians.

Mike "Mish" Shedlock

Comments (4)
No. 1-4
RonJ
RonJ

A manipulated market always manipulates back. For each action, there is an equal and opposite reaction.

Kinuachdrach
Kinuachdrach

As someone once said -- Regardless of what politicians do, the true Minimum Wage is the same as it always has been: Zero!

channelstuffing
channelstuffing

SK takin page out of Beijeng play book,use nothin but slave labor...leads to zero domestic demand,which forces companies to export everything (to guess where!) to stay in business.Question SK companies have to ask is slave labor (like money printing)the answer to all your problems.

pi314
pi314

"Korean firms have raised investment in the US both in response to higher tariffs but also reduced tax rates in the US and investment incentives."

In this instance, the Trump tariffs are good for the USA. But no one wants to talk about it here!