Minimum Wage Price Floor
The Question of Minimum Wage and Price Floors
Recent events in Washington have once again raised the question of if and by how much minimum wage should be raised. The question of minimum wage is primarily one debated by economists, who really benefits by raising the minimum wage? Minimum wage is an example of a government intervention in order to redistribute wealth through the use of a price floor. A price floor is the legal limit on how low a price may be set for a good. In the case of minimum wage, employees are the suppliers of labor (the good) while businesses become the consumers. The only way for a price floor to binding is for it to be set above the equilibrium price the market would naturally balance its self at, and in here lies …show more content…
Some economists believe that there are three times as many workers earning less than minimum wage as there are those earning minimum wage. While related to unemployment another impact is for businesses to increase their production through automation as opposed to laborers. Think of the number of workers employed by Amazon.com who currently earn minimum wage and the potential loss of those jobs if Amazon decide to automate their distribution center operations. There are a number of professions who have been effectively electronically outsourced to include grocery store checkout and bagging personnel, bathroom attendants, elevator attendants, …show more content…
The country introduced a national minimum wage in the 1990s that was slightly higher than the United States. It was set at 46% of the median wage, a second lower floor was set for young people and both are adjusted annually. The result, there seems to be little to no harm from the law. In fact, the minimum wage seems to be spreading the wages so that it not only increased the wages for the bottom 5% but it also increased earnings for those further up the pay ladder effectively shrinking the wage gap at the bottom half. Apparently the minimum wage in Britain encouraged employees to work harder and caused businesses to invest in the training among other things to boost productivity.
So perhaps this raises a different question of not really who benefits from minimum wage but rather how do legislators ensure that the minimum wage they set is managed in a fashion where both employees and employers can benefit. But isn’t that ultimately always the question of balance between social perceptions, business economics and legislation.
What sort of
Recent events in Washington have once again raised the question of if and by how much minimum wage should be raised. The question of minimum wage is primarily one debated by economists, who really benefits by raising the minimum wage? Minimum wage is an example of a government intervention in order to redistribute wealth through the use of a price floor. A price floor is the legal limit on how low a price may be set for a good. In the case of minimum wage, employees are the suppliers of labor (the good) while businesses become the consumers. The only way for a price floor to binding is for it to be set above the equilibrium price the market would naturally balance its self at, and in here lies …show more content…
Some economists believe that there are three times as many workers earning less than minimum wage as there are those earning minimum wage. While related to unemployment another impact is for businesses to increase their production through automation as opposed to laborers. Think of the number of workers employed by Amazon.com who currently earn minimum wage and the potential loss of those jobs if Amazon decide to automate their distribution center operations. There are a number of professions who have been effectively electronically outsourced to include grocery store checkout and bagging personnel, bathroom attendants, elevator attendants, …show more content…
The country introduced a national minimum wage in the 1990s that was slightly higher than the United States. It was set at 46% of the median wage, a second lower floor was set for young people and both are adjusted annually. The result, there seems to be little to no harm from the law. In fact, the minimum wage seems to be spreading the wages so that it not only increased the wages for the bottom 5% but it also increased earnings for those further up the pay ladder effectively shrinking the wage gap at the bottom half. Apparently the minimum wage in Britain encouraged employees to work harder and caused businesses to invest in the training among other things to boost productivity.
So perhaps this raises a different question of not really who benefits from minimum wage but rather how do legislators ensure that the minimum wage they set is managed in a fashion where both employees and employers can benefit. But isn’t that ultimately always the question of balance between social perceptions, business economics and legislation.
What sort of