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Minimum Wage Case Study

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The general minimum wage in the province of Ontario as of October 1st, 2015, is $11.25 per hour (“Minimum Wage”). The intent of a minimum wage price floor is to ensure a minimum standard of living for the labour market (“Section 4: Discussion of Minimum Wage Policy Options for Ontario”). The price floor serves as a threshold, in which wages cannot fall under. The discussion of maintaining or raising the minimum wage is an often contested topic. This essay will delve into the benefits of maintaining the current price floor on minimum wage in Ontario.
Firstly, in raising the price floor on minimum wage by hypothetically $4, it will in fact distort the market. If a price floor is set above the equilibrium price then it will cause a surplus (“Chapter …show more content…

Small businesses need employees in order to run effectively and produce a fair amount of profit. A hypothetical $4 spike in the floor price of minimum wage will be drastic. If they are unable to afford the kind of automation which would allow them to lay off employees, then small businesses such as, restaurants; would be forced to reduce expenses in other places for instance by raising menu prices, sourcing poorer ingredients and/or reducing operating hours, (“Why Are So Many Seattle Restaurants Closing Lately?”) in order to compensate for the profit loss obtained by the increased minimum wage. If these small businesses are not able to cope with this change, then they will easily be put out of business. This would then consequently result in job loss. As well, it will lessen the variety in the market of goods and services available to consumers, hence, stunting economic …show more content…

In order to maximize profits, an employer will hire someone who will bring in enough revenue to justify the higher paycheck. By this theory, an employer would have no motive to hire an unexperienced individual, which would make it increasingly harder for young people entering the workforce to build a resume and gain valuable work experience, which would let them work their way up the career ladder. In this, the higher price floor discourages businesses from hiring low skill workers that may be in poverty and helping them into higher-paying jobs. (“Minimum Wage Hikes Hurt Unskilled and Disadvantaged Workers' Job Prospects”). Inevitably, this will increase the unemployment in lower-skilled individuals which is representative of a waste of human potential and an inefficient

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