What price increases can be expected for selected products and services if a statutory minimum wage of €7.50 per hour were introduced? Are consumers prepared to pay for the additional costs or would they seek ways to avoid these costs? The results of the case study supply some indications for possible price increases on the cost side; the extent to which these price increases will succeed in the market is another question and has not been examined in detail in this study.
Case study of ca. 15 companies and a representative consumer survey.
The overwhelming majority of German consumers favours a statutory minimum wage of €7.50 (ca. 73% of those surveyed), but most are not prepared to pay the associated higher prices. In the case of visits to hairdressers, for example, only one in five surveyed persons would pay the higher price and go as frequently as before. A clear majority would either visit the hairdresser less frequently or would look for a cheaper provider, even if the work was done on the side. Similar results were obtained for hotel and restaurant services as well as for selected consumer products (vacuum cleaners, washing machines, televisions and cosmetics). For the latter products, it was assumed that the entire production (domestic or foreign) would be subject to a minimum wage of €7.50 an hour.
By the Initiative for a New Social Market Economy
ifo Institut und Emnid fragen: Wer zahlt, wenn der Mindestlohn kommt? (12 August 2008, in German)
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