Summary Of A Fresh Look At Labour Markets

One of the most talked about subjects in the U.S economy is the topic of minimum wage. With president Obama’s increase in the minimum wage to 10.10$ per hour people, both economists and politicians alike, have been debating whether raising the bar is a smart idea. At a time when the country the country’s inflation continues to rise at a steady pace and Americans are constantly working to feed their families, some economists know that a raise in the minimum wage would help elevate some of the difficulty. The last time the federal minimum wage was raised was in July of 2009, where rose from 6.55$ to 7.25$. However, there are plenty of reasons as to why the wage should be raised. Some may not think it, but raising the

Ira Knight, who is an author of article “Let’s Make the Minimum Wage a Living Wage”, expresses an opinion that increasing the minimum wage would help all struggling workers and at the same time improve U.S economy. On the other side, Janice Steele in her article “Keep the Minimum Wage Where It Is” argues that raising the minimum wage would have bad effects on workers, consumers and small businesses. Ira Knight’s article seems to be the stronger of the two positions because her arguments are based on several recent studies, and last but not least, she had a personal experience with the minimum wage job.

There is an old cliché that say “the more money you make, the more you spend.” How accurate is this statement? What effects does wage increases, have on inflation? Lately the topic of discussion conveys the matter of minimum wage increases sparking an increase the cost of living. The individuals who would not receive pay raises; but will be affected by cost of living increases as well as labor costs, do not want to see the wages go up. However there are people scrambling to survive on minimum wage or slightly more, while other individuals struggle to feed their families every month. The other side of the debate is the wealthier population feels the lower income population needs work harder to move up the corporate ladder in order to earn more money. While the individuals themselves feel they should be making more money for the work they currently do and services they provide. In this paper, I will cover subject matter pertaining to the many different aspects that come along with wage increases. After analysis of all of the information the choice will be made whether to side with wage increases based on the opinions of individuals on both sides of the argument. Also I will highlight what will be best for the economy and in my opinion what is best for the people.

The issue of the minimum wage has recently come to the forefront of the debate on social policy. There is much disagreement over the wisdom of an increase in the minimum wage in the current fragile economic recovery. Some argue that a dramatic increase is what is needed in order to lift the standard of living for those in the bottom of the economic pyramid. Economists reason that the basic principle of supply and demand mandates than an increase in the wage would result in the loss of available jobs. Small businesses maintain that it would spell their doom.

One source from the Opposing Viewpoints Database called, “Raising Minimum Wage Increases Unemployment” argues against the minimum wage by suggesting it will decrease financial security and cause higher unemployment rates. The author provides unemployment statistics from the 1990s onward as evidence to argue against the minimum wage. The article says, “In 1990, Congress enacted another minimum wage increase.” “The month before the increase took effect, unemployment was 5.2%.” “With the increase, unemployment began to steadily increase and unemployment eventually peaked at 7.8%” (Jaarda). The article emphasizes to readers that increases in minimum wages and following increases in unemployment are not just coincidences by continuingly pointing at similar statistics throughout history.

Our entire society in the United States is complicating whether or not our nation should raise the federal minimum wage. Ranging from researchers who have been studying this incompatible topic throughout their entire lives to amateurs who simply expose their opinions without any logical reasoning to the public are still not able to come to an agreement for a stable minimum wage. Many citizens may assume that increasing the minimum wage, $7.25, an hour, by a couple dollars may not make a significant impact to our economy. However, there still coexists a complex reason behind this whole topic that is currently disabling our society to contemplate on a solution. Generally, most traditionalists who believe that increasing the minimum wage may hurt the young and unskilled workers in an economical perspective. On the other hand, a vast majority of researchers may believe that this opportunity wouldn’t kill jobs and may even give the economy a boost by allowing more low-income workers to spend more on necessities. This controversial issue may be the only fire that will never die out in the United State’s economical history.

To analyse and draw conclusions on minimum wage in relation to its standing in business law, we first of all need to define what the meaning of the term is. National minimum wage was introduced in 1998 through the national minimum wage act. This enforced that employers would pay each employee a set value set by the government per working hour. One of the main benefits of this was that the most low skills jobs within society received a fair wage. Setting the price of minimum wage is a complex task as the main priority is to reduce the negative effect on the labour market, creating benefits outweighing the costs. Inflation and minimum wage have a very close relationship, with inflation being the annual increase in the price of goods and services. As inflation rises, it is natural for minimum wage to follow at a similar rate. In october 2014, minimum wage increased 3%, whereas inflation increased 2%. This shows an improvement in the real term income for over 1,000,000 of the lowest paid workers in Britain.

Research shows if minimum wage was to climb that it would hurt the least skilled and the least experienced people trying to seek a job the most. There are different of opinions people believe in about the positive and negative aspect of minimum wage. Supporters argue that such a boost will shrink poverty without plummeting jobs and that it will boost confidence, increase the normal living, and cut inequality and have businesses to be well-organized. Opponents that are not for minimum wage say it will increase poverty, unemployment and is not good toward businesses. The question about minimum wage and the effects it would cause if it was to rise, remains one of the most commonly studied topics.

For over a decade, many Americans have struggled with the low wage issued from employers, despite working very long hours of work. According to a study done in Oregon State University, a federal minimum wage was first set in 1938, starting at 25 cents an hour. Due to inflation that has occurred many times throughout the century, the call for raising minimum wage is to be immediately answered. However, the minimum wage falls when congress does not raise the minimum wage to keep up with inflation. Because of this many cities and states have departed from the minimum wage. In this essay, to be discussed is the reason why imposing a minimum wage above the equilibrium wage will reduce employment and contribute to an increase in the unemployment rate.

The United States’ minimum wage has been a concerning issue amongst the low wage earners because of the amount they earn is not enough for them to live on their own. Therefore causing the citizens who earn minimum wage to have an impossible time finding a place to stay and expenses for daily survival. Increasing the minimum wage will solve the issues that the minimum wage earners make, thus increasing the chances of survival for the entire population. Inflation is one of the reasons why minimum wage is a big issue, the minimum wage has not been keeping up with inflation at all causing things that would regularly be cheap to be more costly than it used to be. There are people who are against the raise of the minimum wage and may say that there will be an increase between of unemployment rate between the younger people because of the fact

In 1930 the United States passed a federal law controlling minimum wage. This has led to random increases in minimum wages. For more than a century minimum wage has been a key factor in public policy. Minimum wages were first used to prove against the idea of American factories being “sweatshops” (Josh Barro 01). Over time the minimum wage level has risen and fallen do to the progress of the economy. The amount of money earned from a minimum wage salary today is thought to not be enough to live a regular life (. "Four States Vote to Raise Minimum Wage." 01).

Low-skilled workers struggle with unemployment and poverty when a minimum wage hike hits, but in their mind they think they are just making more money. In 1981 the commission wrote an analysis over the job loss effects (Kosters 1). It proved that more job loss occurred when the minimum wage rose. A minimum wage hike is the worst way to get the lower class out of poverty (Sabia 2). The higher the prices are then the harder it

Huppke’s and “The Economists” articles have conflicting opinions about the argument of minimum wage. Economists’ article stays neutral on the purpose of minimum wage; “If, at a higher minimum wage, some of these low wage workers end up being unemployed, that is very destructive, but if research suggests that large numbers of workers can find jobs

In this globalization era, as various countries see growth in their economy, there has also been significant differences in the wages set to employees in different countries. The lowest wages set by the law that are fixed to a particular amount which is also defined to be the price floor below which workers shall not sell their labor, has its own effects. The minimum wage law came into force as a matter of social justice amongst the low-wage workers, also to reduce exploitation and see that workers can afford the standard basic living expenses and necessities, not to increase the unemployment rate, indeed to increase the employment rate.

The introduction of minimum wage, or an increase in the minimum wage burdens the employer with increased costs, so the employer will seek to levy this burden onto the labor force to compensate for these additional costs. Veldhuis supports this by contending that minimum wage causes employers to “respond by reducing the number of workers they employ and/or the number of hours their employees work”. (1) This reaction is explained by theories of producer behavior. Economic theory states that firms are profit maximizers. Therefore, to maximize profits, the firm must minimize costs. A firm minimizes costs when the slope of the Marginal Rate of Technical Substitution is equal to the rate at which capital can be traded for labor in the market (-w/r). This is expressed by the equation = . As illustrated in