Sample Economic Coursework Paper on Minimum wage

Minimum wage

Can you live with minimum wage?

            It is tough living with minimum wage because it is insufficient to cover all the basic needs of a family especially those individuals who have dependents. Raising the minimum wage is thus the only ploy for increasing the living standards of the unskilled labor force in the United States and improving the economy. The growth of the economy is the ultimate goal of a stable government. The expenses that are incurred in daily living is hard meeting with the minimum wage. Such things as mortgage, travel, electricity, fuel and education of family members prove to be a toil while supporting all that using the minimum wage (Bhorat, 2014, P. 42).

Why minimum wage DOES cost jobs

            Minimum wage refers to the minimum amount of salary that is payable by an employer to an employee. In the United States, the minimum wage is dictated by the market labor as opposed to those of other countries which are dictated by the government. An increase in the minimum wage will lead to a reduction of the low skilled labor force (Koeniger, 2001, P. 83). This is in accordance with the law of supply and demand. The low skilled labor force constitute those individuals with a low level of education that is; high school drop outs, undergraduates and high school students.

            Employers are very conversant with the demands of the job market. An increase in the minimum wage will lead to the employers laying off some of the unskilled workers in an organization. While a consequent decrease will lead to the employers increasing the supply of unskilled workers in an organization. Therefore, minimum wage does cost jobs. The minimum wage is always set below the equilibrium wage (Koeniger, 2001, P. 82).

Why minimum labor does not cost jobs

            Pay wage increases without hurting employment. In fact, research shows that minimum labor does not cost jobs. This is exhibited in a report duly signed by 600 economists passed through President Barrack Obama and the American Economic Association. The effects of minimum wage increase have a positive impact to the economy for example, strong earnings, a higher pay rate and no job losses. The effect of minimum wage increase is exaggerated by critics as having a negative bearing. However, the response of the employers with regards to the increase in minimum wage is quite the reverse of the critics’ line of thought. Employers respond to minimum wage increase by, modesty in the increase in prices, and the reduction in the turnover of labor. Thus, increased minimum wage has no bearing on employment (Koeniger, 2001, P.3).

Living wage laws

            Living wage laws generally refers to new policies that gained prominence in the cities in the United States. It refers to the minimum amount of income that is deemed necessary in order for the worker to meet the basic needs. The living wage laws are better than the minimum wage laws, because the minimum wage laws are instituted by the government under the laws that are passed. Moreover basic needs enables an individual to stay comfortable with the dependents, with the ability to sustain a family. It is difficult living with minimum wage because it mostly applies to individuals who have a low wage rate. These includes those who work part time and provide unskilled labor. The benefits of increasing the minimum wage stretches far beyond and is responsible for a stable economy.

References

Bhorat, Haroon. “Compliance With Minimum Wage Laws In Developing Countries”. IZA World of Labor (2014): n. pag. Web.

Koeniger, W. (2001). Labor and financial market interactions: The case of labor income risk and car insurance in the UK 1969-95. Bonn: Forschungsinst. zur Zukunft der Arbeit.

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