April 16, 2015
The Effects of Minimum Wage
The main focuses of this article is the effects minimum wage has on all aspects of the economy in a microeconomics perspective. The minimum wage has a number of positive and negative effects on businesses, families and individual workers, from a microeconomics perspective. 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. 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 has seriously bad effects on a business. The vast majority of economists believe the minimum wage law costs ...view middle of the document...
Therefore, a job would be lost because of the minimum wage. Setting a mandated wage limit disrupts market forces of supply and demand. Just because there is no minimum wage doesn't mean companies can pay whatever they want. Would you work a dishwashing job that paid 25 cents per hour? Would anyone? If they raised the wage to $4 per hour, they might be able to hire a high school student. Market factors of supply and demand determine how many jobs are available and what each job would pay. In summary, as the minimum wage goes up, the number of people employed goes down. When the minimum wage goes down, the number of people employed goes up. Keep in mind: the minimum wage only applies if someone is employed.
Secondly, back to teenagers, workers in training, college students, interns, and part-time workers all have their options and opportunities limited by the minimum wage. Over 95 percent of minimum wage jobs are taken by the groups named above. You cannot make a living and support a family on a minimum wage job. These jobs are typically positions requiring little or no training that can be filled by almost anyone. Many students, part-timers, and other young workers are willing to take much less than minimum wage, especially if it is a fun or educational job. We all know that having a paying job when you're young teaches values such as discipline, hard work, and responsibility. It teaches young workers how to handle money and deal with other people. Thus, as a society we want to maximize the number of young people that work, even if it's for small wages. It will simply mean fewer low-skill jobs for those that actually need them.
I agree the minimum wage hurts the business. Minimum wage gives businesses an additional incentive to mechanize duties previously held by humans. The minimum wage creates a competitive advantage for foreign companies, providing yet another obstacle in the ability of American companies to compete globally. The minimum wage can drive some small companies out of business.