Increaseon the Minimum Wage
Increasein the Minimum Wage
Minimum wage per month is the price floor for any labor or servicethat employers should give employees in a particular agency. Themarket is the context where goods and services are exchanged. In thiscase, market involves sellers (workers) offering goods and servicesin the swap for money from buyers (employers). This courseworkdiscusses the impact of increased minimum wages to the US market.Increasing minimum wage to ten dollars per month has both positiveand adverse impact on the market. One of the positive implications isthat worker will have a higher purchasing power. However, theamplification has more undesirable effects than benefits. It leads toa high quantity supply and low quantity demand. The supply ofindividuals willing to work will increase. On the contrary, while lowquantity demand relates to the reduced demand for employees leadingto fewer jobs (Hoffman, 2014).
Thescenario will hurt the unskilled labor or workers who do not havespecific qualifications in a particular job. This because an increasein the price floor will lower the employers’ demand for unskilledlabor. In such a situation, many inexperienced people will be willingto provide labor. The phenomenon leads to a surplus of laborresulting to unemployment (Hoffman, 2014).
Whenthe government sets a price floor above the equilibrium wage rate, itleads to a correspondent increase in prices of goods and services onthe market. The change occurs because the market prices are alwaysabove the minimum wages (Hoffman, 2014).
Inconclusion, raising the minimum wages is a well-intension idea by thefederal government. Conversely, the idea oversimplifies thecomplicated and nuanced reality of the US economy. In a sense, itwill lead to more problems in the economy than solutions.
Hoffman,S. D. (2014). Employment Effects of the 2009 Minimum Wage Increase:New Evidence from State-Based Comparisons of Workers by SkillLevel. B.E.Journal of Economic Analysis & Policy, 14(3),695-721. Doi: 10.1515/bejeap-2012-0004