When wages increase an economic boom should follow
Dear Sir, When wages of the poor increase, so do their spending, which helps improve the economy. On the other hand, when wages are lower for the poor, they spend less. Since the poor's consumption elasticity is more than rich peoples, when the same amount is left with a rich person his spending doesn't increase as much. Most likely, the money lies idle doing nothing for the economy. But if given to a poor person, the poor person will most likely spend it as his consumption elasticity is greater. An increase of $1 will induce a poor person to spend more than it will a rich person.
Note that the effect of spending is multiple. When the poor's wealth increases, so does his consumption. When his spending increases, other businesses (shops, restaurants, etc.) revenues increase and so do their owners' profits. As demand on products and services increases, businesses produce more and hire more workers, reducing unemployment.
In addition, these business owners are now richer so they can also increase their own consumption, which once again puts more money into the economy, repeating the cycle. Also, the newly-hired workers also have more money to spend. That puts even more money into the economy, increasing circulation of money manifold. In this way, there is an economic boom and everyone's standard of living improves! And it is the circulation of money that improves living standards.
Consider the following scenario:
Asian expat workers' wages are increased. Workers can now afford better accommodation. They can also afford more food, better clothes, better transportation, frequent trips out of the country, etc. So they spend a portion of their monthly income on these, causing the demand for these to increase. Apartments which were formerly lying vacant are rented, increasing building owners' incomes. Building owners can now spend more on other things, such as meals in restaurants, shopping, vacations, etc. Money spent on these things once again go into the economy, boosting earnings of restaurants, shops, airlines, etc. As their sales increase, workers are hired to handle the increased business, thus reducing unemployment. Newly-hired workers can spend more, so the process is repeated. And so, the money continuously circulates in the economy over and over, raising everyone's living standards and making everyone better off!
On the other hand, if business owners continue to pay current wages, having increased profits, most of this money goes into the bank account. This is because rich people's spending/consumption elasticity is less than poor persons. (An extra dollar earned by him wont induce him to spend since he already has his basic needs covered.) So the economy remains at the same rate.
It is true that Asian expats will send more money back home if their wages increase, but they will also increase spending here. Additionally, some who couldn't previously bring their families with them will now be able to do so which will actually reduce money sent back home, while increasing their spending here (on rent, food, children's education, etc).
So do business owners have to sacrifice their profits to increase workers wages?
In the long run, no. This is because money that circulates comes back to the original spender in another form. Money goes from one person to another to another and then back again, making each person better off.
Take the example of a building constructor: He increases his employees' wages/salaries enabling them to rent separate homes instead of sharing. This increases demand for houses (since each person can afford to rent a house of his own). The increase in demand for houses boosts the construction industry as more people start building houses. So the building contractor gets more construction contracts, increasing his revenue and profits.
This is a simple example to show that money that circulates in the economy benefits everyone, improves living standards and no one loses in the long run. On the other hand, money that doesn't circulate doesn't do anything to improve the economy.
So the way to improve Middle Eastern economy, improve living standards, reduce unemployment, etc is to increase the wages of poor people (whose consumption elasticity is greater).
A minimum wage high enough to provide decent living conditions for workers and their families, paying for their basic needs, would do wonders to the economy.
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