Negatives Of Minimum Wage

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Minimum wage is the lowest amount of hourly or monthly salary that employers may legally pay to employees. Before minimum wage was enforced, employers would take the advantage of young and minority workers by underpaying them but now employees are protected by the law to receive a certain lowest amount for their jobs. The topic of how a minimum wage impacts the economy is one of the widely studied and most controversial topics in labor economics. There has been a significant amount of discussion regarding how minimum wage can impact employment and economic growth in short run and long run.
In current economy, there are two social arguments on the minimum wage. Supply side argues that higher minimum wage is a burden for a small business and may lead to job loss among low skilled workers. Demand side argues that minimum wage will impact employment over time, through changes in growth rather than an immediate drop in employment levels. They believe that the higher minimum wage will cause more spending by the minimum wage workers which will also reduce poverty. By bringing both sides of this argument together, the minimum wage objective will be discussed and analyzed whether it is beneficial or not to our current
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When the supply of labor is equal to the demand for labor, the labor market is in equilibrium at the intersection between the supply and demand curves. A rise in the money wage will decrease short-run aggregate supply and shift SRAS curve leftward while LRAS curve stay the same. The shift of SRAS curve will result in increase in labor supply while decrease the quantity of jobs. According to the macroeconomic model and basic supply and demand suggests that higher minimum wage will increase the unemployment rate, however many studies have found that increase in the minimum wage have had no measurable or negative effect on the employment and labor economy in the long
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