preview

Persuasive Essay On Minimum Wage

Decent Essays

In a modern world where income inequality is rampant and economic conditions are often very unfavourable to the vulnerable poor of our society, the minimum wage is often a heated focus of public policy debate. The debate often revolves around one simple question: “To what degree does an increase in the minimum wage increase the wellbeing of minimum wage workers?” Although this is a debate which is fundamentally centered around the workers, it is important to consider the reaction of the employers when attempting to create effective minimum wage policy. The responses of the firms represent a key factor; especially when projecting the potential effectiveness of the implemented programs. Generally speaking when employers are faced with the problem of being forced to pay higher wages as a result of legislated minimum wage increases, they are left with limited solutions with which to manage the associated increase in production costs as a result of the higher wage. They can choose to pass costs along to consumers, however that can result in long term sales declines which leads the firm into a downward spiral of falling profitability. This was found to be the strategy employed by Pennsylvanian fast food firms facing wage increases in the late 1990’s. As explored by Alan Card and David B. Kruger in their paper examining the response of minimum wage paying firms to price increases, they found evidence “suggesting that much of the burden of the minimum-wage rise was passed on to

Get Access