(the following article appeared in Chron)
A minimum wage is a prescribed wage level that must be met or exceeded by employers in all employment contracts, as set forth in the Fair Labor Standards Act. The minimum wage is revised from time to time to adjust for inflating prices. Microeconomics is the study of financial issues from the perspective of individual economic units, such as a single household, small business or individual. The minimum wage has a number of positive and negative effects on businesses, families and individual workers, from a microeconomics perspective.
Effects on Business
Businesses that rely to a large extent on unskilled labor
generally experience dramatic increases in wage expenses as a result of a
minimum wage, since a minimum wage virtually eliminates companies'
ability to negotiate wages for their lowest-level employees. According
to the U.S. Department of Labor, the minimum wage increased about twenty
four percent between 2007 and 2009, going from $5.85 to $7.25 per hour.
Businesses that employ unskilled labor see their profit margins
diminish and their expenses increase, presenting a challenge to their
economic growth and introducing a new variable to economic
decision-making.
Local Employment
Many companies see the minimum wage as a large expense for an
unskilled worker, which can cause them to impose stricter decision
criteria for hiring or cut back on hiring altogether. Minimum wage jobs
are often suited for young people entering the workforce for the first
time, but, according to the Employment Policy Institute, every 10
percent increase in the minimum wage causes a five to nine percent
decrease in youth employment. This can cause a situation where
individuals with little experience who might happily accept a lower wage
find themselves unable to find a job. If this trend continues in
specific regions, local unemployment could rise, possibly raising
homelessness and crime rates as well.
Effects on Individuals
Employees experience direct benefits from a minimum wage, but
there are a number of drawbacks to consider as well. The obvious benefit
to unskilled workers is the guaranteed boost in discretionary income
provided by a guaranteed wage. Highly skilled and experienced workers
experience a boost in income as well, since a raise in the lowest wage
pushes all other wages upward as well. It can be argued that the minimum
wage has never been high enough to fully support a family. According to
the U.S. Census, only around seventeen percent of minimum wage earners
are supporting families on their own. The effects of business's
reactions to the minimum wage can be detrimental to employees in the
long run as well. Companies may turn to automation or outsourcing to
control the increase in wage expenses. This could reduce the number of
jobs available in the marketplace for unskilled workers, again resulting
in higher unemployment. Younger employees can benefit greatly from the
minimum wage. Employees entering the workforce for the first time, with
no experience, can count on the minimum wage to provide them the income
they need to handle their first expenses. This, in turn, allows
heads-of-household more discretionary income to spend on family needs.
19 comments:
The minimum wage in the economy has been increasing over time. Currently there is discussion on moving the minimum wage up to $10. This increase in minimum wage can cause decrease in the percentage of people in poverty. It can also have a negative affect and increase the standard of living. In reality corporations use money to produce products and this cost will not change even if the minimum wage changes. Therefore this will make the cost of those products being produced increase to make up for the money being distributed to the workers instead of production. I think minimum wage is important because this will prevent the employers from paying you so little for any jobs. If there was no minimum wage, an employer could pay a worker $2/hr which will cause a major increase in the poverty line in our economy.
Minimum wage is slowly but surely increasing over time. As the articel stated, it is very difficult for individuals earning minimum wage to actually be able to care for their family. Recently, President Obama has made it a point to try and raise the minimum wage to $10.10 an hour and that could be a major boost and create a helping hand to those staring into the face of poverty. If the minimum wage does in fact increase it could reverse the signs of increasing unemployment in our economy. However, there is no such thing as a "free lunch", if the minimum wage does in fact increase the cost of the products being produced are sure to follow the increase so that employers could try and mend all the financial loses.
Minimum wage has seen several increases since the late 1930's when statutory minimum wage was introduced in the US. The current law in affect, the Fair Minimum Wage Act of 2007, sets minimum wage at $7.25/hr. Currently President Obama has changed minimum wage for all federal employees to $10.10/hr. Obama has attempted to reason with Congress that there should be a change in the national minimum wage although currently the Congress had not made any changes in the law. Minimum wage increases negatively effects small businesses because they have to pay their employees more and thus the business losses profit. This can sometimes cause a halt in hiring or stricter requierments to be hired. Increases in the minimum wage also means the percentage of young unskilled people to find jobs diminishes. Companies attempt to make up their losses by cutting cost with investments automation and also by outsourcing jobs. In my opinion an increase in minimum wage might cause a decrease in jobs available. I believe that minimum wages also has a positive effect in our economy because if it wasn’t for this law employers would most likely overwork people and provide them with unfair wages.
Having a set minimum wage is a great thing because, like the article states it eliminates employers from negotiating a person's salary down to nothing. It sets a standard at which employees can expect to get paid and also gives employers a fair starting point when it comes to employee wages. Obama has raised minimum wage to $10.10 this can be both a positive and a negative thing. This can be seen as a positive because it will allow workers to better support themselves and thier families. It will also provide those just starting out in the work field decent pay to pay their expenses. The raise will also help to eliminate those living in poverty. However it can be seen as a negative because more employers may look for cheaper options when it comes to labor.Autimation and outsourcing may more widly uses to cut wage expense. This will cut the numbers of jobs for the unskilled and young worker. Prices of good and services may also increase as a result of the wage increase.
I believe minimum wage is a positive for society because it sets standards. I am happy that the standard minimum wage will be raised, however I fear that the number of jobs will be cut because it.
Minimum wage effects Businesses, Local Employment, and Individuals. The article states the effects among these three categories separately. The main effect on Businesses is that unskilled labor causes their profits to decrease while their expenses increase. The main effect on local employment is that new and young workers tend to accept jobs that pay less because they are first timers, if minimum wage increases it causes a decrease in the chances of these first timers getting hired. The main effect on individuals is minimum wage is beneficial for them if they are first time workers, if they are not then this amount of income will never be able to support a family. Altogether, article is stating that as a young and new worker, a minimum wage is helpful but on the other hand if you are not, minimum wage will never be able to support a family or any other needs. I believe that minimum wage can be useful but also can harm people who actually need money for family reasons.
The talk about minimum wages has to be the hottest topic in the United States. From it going from $5.85 to $7.25, now talk about it becoming $10.10. This show increase on minimum wage will hopefully help many people that are eligible to receive it. However, I fear that even with this “help” it will not benefit the economy, one would hope that it doesn’t prevent companies from hiring people. Obama is hoping that by raising the minimum wage it will make a difference in poverty in the United States but what if it doesn’t make a difference. Minimum wages will affect individuals, businesses, and the economy all differently, which makes it hard to predict if this change will pay off in the future.
A set minimum wage is essential to the economy. If there was no minimum wage employers would be able to pay employees whatever they felt they were worth, and being honest, that number would probably almost always be lower than it should be. “The root to all evil is the love of money”, and I agree with that. No one wants to spend more than they have to. The talk of raising the minimum wage to $10.10, has everyone scrambling for pros and cons to the matter. The reality of it is that everyone will all have their own opinion. You can’t base life on assumptions, things need to be tested out. After all, is that not how a hypothesis becomes a theory, and a theory into a law? I say, try it out. At this point we really have nothing to lose. Everyday America goes another sum odd billions of dollars in debt. Raising the minimum wage will increase purchasing, but along with that comes the increase in pricing as well. However, the small changes in pricing, may be worth raising the minimum wage and pulling people out of poverty. It is worth a shot, individuals, as well as businesses may really benefit from this change.
The topic of minimum wage is one of great importance to many different establishments and workers. There has been talk of increasing the minimum wage to $10. This decision to increase the minimum wage could have both a positive and negative outcome. For one, individuals who are currently making minimum wage say that it is hard to support their families with their low income and therefore raising minimum wage would increase their quality of living. On the other hand, job spots could become harder to obtain due to employers wanting to keep their profits where they were prior to the minimum wage increase. In my opinion, the minimum wage is a positive aspect of businesses because said business can't take advantage of their employees by under-paying especially in the case of younger individuals.
I agree with everyone so far. As of working for three years, the minimum always started at $7.25. However, I happen to think it would be a good idea to increase that amount. For one thing, I think it is good for everyone who is currently already working. If wages were to increase, this means more money in peoples pockets. I think it will also circulate the money flow, which therefore will be beneficial. This could also have a negative effect, as if minimum wage does increase, this may cause an increase in prices. So, then, what is the point of raising minimum wage if items that we need/want are just going to increase? Agreeing with everyone, could help reduce poverty and Obama is heading in the right direction. Keeping minimum wage where it is will not help anything. Since minimum wage would be so high, employers would be forced to start money at $10.10, which means that workers will not feel as though they have no power. This is also beneficial for workers because lets just say a person works at a job for a long time, and still did not receive a raise. The minimum wage takes care of that. I think it would take a lot of adjusting too, but Obama is on the right track.
Minimum wage can be benificial to many individuals. With minimum wage increasing, poverty will decrease and give individuals a better chance to make a higher income. Although that may seem helpful to some lower- middle class individuals, it may not support the success of a business which can also affect opportunities for employment. If businesses are paying unskilled employees a higher minimum wage that can lower their profit. They may be more skeptical and cautious with there highering process. Which will not benefit an unskilled employee in that case.
Minimum wage has its pros and cons. For inexperienced workers it gives them an opportunity to earn a decent amount of money,but for the businesses it is slowly eating away at their profits. If the minimum wage were to increase over time businesses would have to increases the price of their goods to replace what they pay their workers. I think increasing minimum wage would do more harm than good simply because some establishments just cannot afford it, employees would soon find themselves being laid off from their jobs due to the increased wages or because the business itself closes its doors for good.
It's quite fascinating to see how some positive affect on employees, can in return have a negative effect on businesses, employment, and individuals.
Businesses that hire unskilled labor eventually see their profit margins decline and their expenses increase, ultimately presenting a challenge to the companies economic growth.
Once the minimum wage increases, companies may enforce stricter decision criteria for hiring new employees. Or, companies might just cut back on hiring completely.
Employees are most definitely affected positively from an increase in the minimum wage. Both unskilled and highly experienced workers experience a boost in income. A raise in the lowest wage pushes all other wages upward as well.
However, there are a few negative outcomes as well affecting individuals. A higher minimum wage may result in companies using automation or outsourcing. This could reduce the number of jobs available in the marketplace for unskilled workers, again resulting in higher employment.
An increase in the minimum wage is great news, however there are many long-term issues that arise.
The minimum wage has been increasing slowly as the years go by. I learned that the minimum wage took an increase in 2007-2009 from 5.85-7.25 and that amazed me that minimum wage use to be 5.85. I like the idea of an increase of minimum wage to 10.10 because this will help people struggling to be able to get a job that can help them sustain some type of living. An increase in minimum wage will be great nationally if the bill gets passed because if people have more money people will spend more money too. I understand that there is a negative effect for the businesses but they will see progress in the long run because more people will by their products so to me it balances itself out.
The fact that minimum wage is now going to increase I directly think of the short term effects and long term effects. I think of how employees will be earning more but I also think from a business owners perspective having to pay more each time to pay their employees. And as for the long term it will eventually cause an increase on products and everything in general. It seems to be like a cycle once minimum wage rises, owners need to raise their prices so they have enough to pay their employees, and this causes others to raise their prices as well.
Being an International Student, that is not born in America, I understand that probably my views of the world are way different than American citizen. However, minimum wage is minimum wage and expenses are expenses wherever you go. Either you live in poor countries, or the so called great America, trying to live and have a decent quality of life and here I am not talking about a great standard of living, I am talking just about surviving, is really hard. The minimum wage was created to help the society in many ways, however we see these days that the minimum wage is holding us back. The amount of money received is barely enough to put food on the table at the end of day. Things are getting much more expensive and the minimum wage is not following and growing with the same pattern and people are living a hard life.
Minimum wage is a very tough topic to talk about. It effects so many people both in positive and negative ways. In my opinion, I think minimum wage is all relevant. Many factors are determined on top of labor costs. When you have an increase in wages, it causes a chain reaction in all prices going up for household consumers. This is due to the extra expenses that businesses have to pay. With a higher minimum wage, these consumers are paying more for everyday items that are necessary to every family. At the end of the day, we are not left with extra money in our pockets. This would generally mean that consumers tend to save more which would lessen the amount of money flowing through the economy. Wages will always increase as the economy changes, but I do not think that there is a need for such a big increase.
Minimum wage has many pros and cons. An increase in the minimum wage effects workers, businesses, and families both positively and negatively. A minimum wage can be a great thing because it eliminates the possibility of workers having to negotiate their pay down to nothing. The minimum wage has been increasing over the years and will continue to increase as inflation does. This is beneficial to those working at minimum wage who must support their families. However, there can also be negative consequences to the increase. Businesses must pay their employees more and this tends to lead in a pay raise for the majority of workers. Thus companies must spend more on labor and this may force them increase prices or lay off laborers. There is discussion lately to increase the minimum wage to $10.10 from $7.25. This is a dramatic increase that will have many effects on businesses and the economy.
Minimum wage is an essential part of the economy in America. Without minimum wage there would be no setting stone for pay an employee should earn. Throughout the years minimum wage has increased slightly and recently President Obama has announced his plan to increase it by more than two dollars to about $10.10. There can be many positives and negatives to this. Positives include decreasing the percent of people in poverty,and helping people live more comfortably. Negatives include an increase in price for standard of living and supporting workers to do the bare minimum. At one point in time minimum wage was for teens trying to get there first jobs and start to adjust to the real world. Now people of all ages take these jobs because its just enough to support them. Minimum wage is very important to the economy but like everything in life there are pros and cons to it.
With the minimum wage increase in NY this year, I believe the economy and the people effected would be very pleased. The individuals who are employees experience benefits right away. The increase of money to the employees also has a positive effect on the economy itself. With more spending money for the everyday consumer, the economy should experience a better outcome if the minimum wage stays increasing. I believe it also increases the standard of living for workers and boosts morale while reducing poverty and inequality. Some people may say it has negative effects such as increased poverty, unemployment and it damages businesses. The way an increase in minimum wage damages businesses is that it makes employers pay more money to their workers. This can also be viewed as a positive effect because it can boost worker morale and makes business more efficient.
Post a Comment