Minimum wage essay
Some people may support minimum wage legislation because they believe it will help struggling workers to make ends meet. What do you think about that?
Minimum wage, as a kind of price floor, refers to the least amount of money that employers can legally pay labors for per hour of work. Therefore, government sets a price that is under the market equilibrium price in order to reduce the poverty and ensure that young employees and minority will not be treated unequally. However, those aimed goals are not accomplished as expected and minimum wage only makes economy inefficient and worsens some people’s lives.
After the minimum wage is imposed above the equilibrium wage rate, this results in the supply of labour being greater than the demand for labour. Therefore, while only E2 amount of labour is demanded in the market, E3 amount of labour is provided and causes excess labour. In theory, the minimum wage results in excess supply of labour because the higher costs of labour motivate companies to cutoff employees and then cause unemployment, ceteris paribus. Meanwhile, the minimum wage reduces the demand from E1 to E2 so this reduces both consumer and producer surplus, and creates a deadweight loss to the society. Furthermore, it is highly possible that because of the increased production costs, the quantity of supply is increased and the average price level is increased overall, so consumers tend to pay higher prices. Therefore, when price floor is imposed, deadweight loss and excess supply of labour are created, and unemployment rates and overall price level will be increased. Subsequently, although there are considerable large amounts of people are benefited from the minimum wage, those poor people without enough professional skills or in the state of unemployment are likely to suffer worser living conditions. While those people in employment are benefited from the minimum wage, they are also affected by minimum wage negatively, like less opportunities to
Minimum wage, as a kind of price floor, refers to the least amount of money that employers can legally pay labors for per hour of work. Therefore, government sets a price that is under the market equilibrium price in order to reduce the poverty and ensure that young employees and minority will not be treated unequally. However, those aimed goals are not accomplished as expected and minimum wage only makes economy inefficient and worsens some people’s lives.
After the minimum wage is imposed above the equilibrium wage rate, this results in the supply of labour being greater than the demand for labour. Therefore, while only E2 amount of labour is demanded in the market, E3 amount of labour is provided and causes excess labour. In theory, the minimum wage results in excess supply of labour because the higher costs of labour motivate companies to cutoff employees and then cause unemployment, ceteris paribus. Meanwhile, the minimum wage reduces the demand from E1 to E2 so this reduces both consumer and producer surplus, and creates a deadweight loss to the society. Furthermore, it is highly possible that because of the increased production costs, the quantity of supply is increased and the average price level is increased overall, so consumers tend to pay higher prices. Therefore, when price floor is imposed, deadweight loss and excess supply of labour are created, and unemployment rates and overall price level will be increased. Subsequently, although there are considerable large amounts of people are benefited from the minimum wage, those poor people without enough professional skills or in the state of unemployment are likely to suffer worser living conditions. While those people in employment are benefited from the minimum wage, they are also affected by minimum wage negatively, like less opportunities to