The Pros And Cons Of Minimum Wage

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The idea of the minimum wage is that workers are guaranteed enough money to improve their standard of living. The price of the minimum wage is determined by the state, but a federal minimum wage is set. Some states choose to go above the minimum wage, while others, such as Alabama and Louisiana, choose to not have a minimum wage at all (Root). The minimum wage is important to society, because it can affect many people’s lives. There are many pros and cons to having a minimum wage in the United States. Furthermore, various stakeholders are also impacted by this policy in numerous ways. Minimum wage is a microeconomics and macroeconomic problem that has many consequences. Therefore, minimum wage has been a great economic issue because of…show more content…
This concept is still true in regards to jobs. Therefore, the higher minimum wage is, the less employers are going to demand labor in the short run. Minimum wage usually only affects teenagers and young adults, because they take jobs that require less skill, because they have less human capital (Henderson). Not having a minimum wage can greatly affect these people in the long run, because it encourages teenagers to drop out to find a job at a young age because there is less jobs. Minimum wage can also lead to cost-push inflation, because an increase in cost can lead to an increase in labor cost to the consumer (Pettinger). This leads to a nonstop continuation of increases of prices. In addition, minimum wage greatly reduces competition among firms. For example, Wal-Mart pushes for higher minimum wages, presumably to make things more difficult for their low-wage competitors (Henderson). This can lead to companies moving to another country where labor costs less and therefore taking away jobs from the American economy. The cons of minimum wage have influenced many stakeholders. The policy of minimum wage affects countless people. It affects everyone from employers to entire families. It greatly affects young adults, because the first jobs they get are usually low paying jobs. They are usually the first directly hit by not having a minimum wage, because they need jobs despite of the pay and are only beginning to build their skills set.

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