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The Impact Of Minimum Wage

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Minimum Wage Minimum wage is an economic principle that ensures individuals can maintain a minimum quality of life. Minimum wage is a basic government-imposed price control. Workers’ concept of low-wage work is shaped by a number of sociopolitical factors—documentation status, race, gender, geographic location, education level, and previous employment (Kahle 2013). Price controls set a floor indicating what minimum price must be paid for certain goods or services. Governments set price controls to ensure individuals receive a fair wage at various jobs (Vitez 2012.). Neoclassical economic theory predicts what will happen to minimum wages in an economy on an employee and employer level. The market of labor is subject to supply and demand just …show more content…

Minimum wage is grounded in the view that if a worker and employee agree on a wage then this wage level must be welfare maximizing for both them and by definition for society. The only thing a government regulated price for labor can do is distort labor markets and lead to less, not more economic welfare (Atkinson 2013). The impact of minimum wage depends on the employees’ skills and experience. Highly skilled workers are not affected because their wages are above equilibrium minimum which makes these workers minimum wage not binding. Minimum wages result in unemployment because the number of employees seeking employment is exceeding the number of employees organizations are wanting to hire. For example, teenage workers with increased minimum wages results in less job opportunities for other teenagers who drop out and decided to join the workforce ;minimum wage alters the minimum demanded and minimum supplied. Increasing the minimum wage will decrease the need of workers in the market because employers will have to cut costs to pay the new minimum …show more content…

The neoclassical theory suggests that an increase in minimum wage would decrease welfare not maximizing the issue. But through the supply and demand graph it shows the exact opposite. If the minimum wage were to increase for low-wage workers then the number of positions available causing unemployment. Employers would have to alter their demand to what they can afford because now they have to adhere to the demands of the government’s regulation on increasing the minimum wage. Highly skilled workers would not be affected in this scenario because they are paid above the minimum wage. The market is largely affected by minimum wage requirements for low-wage workers and there needs to be a balance of what is supplied and demanded in order to maintain the same level of functionality in the

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In the labour market model, we assume that households are the suppliers of labour and the businesses are the demanders of labour. Most importantly, the price of labour is wage. Then in a free labour market without minimum wage, the wage will settle at a point where quantities of labour demanded equal the quantities of labour supplied, called the equilibrium. Next, the premise of a minimum wage is to secure a wage for workers at a level above the equilibrium wage. At a high wage, people are understandably more willing to work.

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First, one main reason that the minimum wage should be raised is because the economy will prosper. “Economic Policy Institute stated that a minimum wage increase from the current rate of $7.25 an hour to $10.10 would inject $22.1 billion net into the economy and create about 85,000 new jobs over a three-year phase-in period” (ProCon). This quote shows that the economy will flourish from the increase of the minimum wage and that unemployment will decrease. Another quote that shows how raising the minimum wage will affect employment is “To the extent that through these contour effects it affords as much as 70 percent of the workforce greater purchasing power, it effectively increases aggregate demand for goods and services, which should ultimately lead to the creation of more jobs” (Challenger 19). Bryan Covert supports raising the minimum wage by

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According to William Dunkelberg, a writer for Forbes magazine, by raising minimum wage there could become less jobs than before. Though the people who have jobs would be making more money, smaller companies wouldn’t be able to pay for their employee’s, and would have to let people go. “Small businesses stay in business

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Raising the minimum wage has been one of the biggest debates during the 21st century. One side of the spectrum argues that raising it will make it so they have a living wage, while the other argues that raising it will hurt the economy. Whichever the case is, people are clearly divided on this issue. Before Oregon passed the 15 dollar minimum wage law, people wrote arguments to try to either prevent or pass this law. The article, “How a $15 minimum wage would affect a real business: Guest opinion” by Lee Spector argues that raising the minimum wage would hurt small businesses like the one he earns.

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Minimum wage would raise the wages of many workers and increment benefits what disadvantaged workers. An estimated 6.9 million workers would receive an incrementation in their hourly wage if the minimum rage were raised to $10.15 by 2015. Due to the spill over effect the 10.5 million workers earning up to a dollar above minimum wage would withal be liable to benefit from an incrementation. Women are the most astronomically immense group of beneficiaries from a minimum wage increase. Sixty percent of workers who would benefit from an incrementation are women.

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To begin with, economists say that many people in poverty do not work. Second, most minimum wage earners are not from poor families. Also, low-income families do not even meet the “low-wage worker” bracket. In effect, they do not benefit from the program. Lastly, raising minimum wage has an indirect consequence to the “low-skilled worker.”

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The point is that, with the increase of the minimum wage, firms that face higher costs cannot maintain profits simply by raising prices regardless of demand for their products. While the increase of the minimum wage will increase demand for those products purchased by low-income people, it will not yield an equal increase in demand for all

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A minimum wage increase from “$7.25 to $10.10 would result in a loss of 500,000 jobs”. ("The Effects of Minimum-Wage Increase on Employment and Family Income”) This claim is better because it shows how raising the minimum wage will decrease job growth instead of increasing it. But, the minimum wage should be increased because increasing will also increase economic activity and spur job growth, decrease poverty, and improvements in productivity and economic growth have outpaced increases in the minimum

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At first glance, raising the current minimum wage seems like an outstanding idea and one may think, “Hey, it’s not hurting anyone.” In reality these good intentions will result in many unintended consequences such as causing businesses to hire fewer workers, it has no effect on reducing poverty and will decrease employment. A common misconception referring to minimum wage in the United States is that the current minimum wage is not enough to make a living and support a family. The majority of minimum wage workers are between the ages of 16 and 24 years old.

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Many politicians, business owners, and citizens hold fast to the belief that heightening the salary attached to minimum wage positions will yield negative benefits for our society. This opinion is supported by three vital view-points. The first can be found in the news article, “The Argument Against Raising Minimum Wage.” It expresses how the enlargement of this payment will take a toll on employment. The document reasons that if the amount of money employees earn is expanded, companies will be less likely to hire as many workers (Huppke).

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"(Brecher, 1974, P. 192) Minimum wage has existed in United States since 1938 under the new deal, and it is legalized in many other nations too. However, if we want to discuss how minimum wage would affect the United States, we must first understand what is minimum wage. In economic terms, minimum wage is a price floor, which is a government price control on the lower limit of certain product. In this scenario, cost of human capital, in other words the wage is being regulated by the government.

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Because taking into account negative employment effects and increases in consumer prices induced by the minimum wage would wipe out any positive direct effects on household affected by the minimum wage. The minimum wage becomes even less effective in reducing income inequality when negative employment effects are taken into account. I will address the negative effects in sociological aspects by the

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If America raises the minimum wage to $9.00, it will help people in need or in poverty, but it also won’t hurt people in the workforce. If you increase the minimum wage to $15.00 it will make unemployment rates go high up. Which in the process, makes the homelessness rates go up in the country and in your community. If you keep the minimum wage at $7.25 people will stay in poverty and homeless or on the verge of homelessness.

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The people who are opposed to minimum wage would completely argue that by raising these wages, it is only hurting those that minimum wage set out to help and for that same reason, they openly oppose it. In such a competitive world, those who fall behind will surely get left behind and it only will create a survival of the fittest situation which does not bring too many benefits into the

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The argument that raising minimum wage will stimulate the economy in a positive way is based on the thinking that more money in the pockets of minimum wage workers, as well as anyone who experiences increased wages due to employers increasing their overall salary ladder, will in turn spend that money on items and services that pour back into the businesses that need to increase wages. The idea is that not only will more people be able to afford essentials, but they will have additional disposable income to spend. Argument Analysis Pro #2: Increased Availability of Jobs Argument

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