If labor market has no restrictions, the wage would adjust so that anyone willing to work could find a job. Small businesses would not be the ones that are most hurt and would not be forced to close down. Companies would not have to lay off employees and decrease hiring levels. Higher wage floor also disrupts economic system and causes a lot more of side effects that are very damaging to the market. I think every country should try balance the minimum wage levels to help to stimulate economic growth and keep all the citizens happy, including the poorest and most unskilled and create many job opportunities for them.
First and foremost, minimum wage increase the cost of production which in turns bring negative impact to the overall economy. This imposes burden on companies because not all companies can afford to pay higher salary to all employees. Therefore implementation of minimum wage system will result in higher rate of unemployment because those companies will sack some employees and divert their wages towards funding the increments in salaries for the remaining workers. Increase in unemployment rate will also bring about the undesirable social issues such as rise in crime rate. Unlike minimum wage system which leads to financial crisis, flexible wage system ensures stability in economy to make sure it remains profitable and workers remain employable.
There are advantages and disadvantages of raising minimum wage or maintaining a set wage. There are valid points of both sides. Many do trust that increasing minimum wage can be accomplishing and beneficial. It will encourage more people to get jobs and that this puts more cash into the economy. As we know personally, additional money earned outside of a set wage will be spent by buyers in which the government can spend their expenses on more useful programs directed to poverty or borderline.
For instance female or younger employees. Therefore by having a minimum wage, this will eliminate the effects of discrimination of poorly paid employees. Increase productivity: One of the theories of minimum wage is that higher wages will make the workers work harder and therefore increase labor productivity. Reduce poverty: Minimum wage also aim to reduce relative poverty as it will increase the wages of the poorly paid workers. Increased income may also help to improve the standard of living for these workers.
Despite the fact that these migrant workers will increase the crime rate, however , it is important to take the big picture into consideration, this benefits from having cheap labor force clearly outweighed the negative consequences of migrant workers . This is because the influence of a country mostly depends on the economic development. To conclude, it seems that the effect of migrant workers is more positive than disadvantages. Although migrant worker might raise social unstable factors and increase the crime rate , the Cheap labor force would help to boost the economy since host country does
Hence, they show the sign of allocative inefficiency which can be resolved by government purchasing the excess supply. But this allocative inefficiency reflects in welfare loss for the society where MC>MB. In both the cases, the producers are benefited because they sell their product at a higher a higher price. Besides, the policies also call for employment to meet the subsequent new supply for the market. This shows that the workers are better off because of increased employment in the market.
In this days it is customary for countries to set a minimum wage for the labor market, this is a minimum amount that the employer can pay to the worker, this is a bottom limit to set the salary of each employee. Governments set this minimum wage determining the minimum income a worker can perceive or which is the lowest amount a company can pay their workers, this in order to try to regulate the labor market so employees do not become underpaid or companies’ abuse workers from their dominant position. But this minimum wage also has downgrades, as it can foment underemployment, informality or unemployment since the minimum wage could be higher than companies are willing to pay as such it needed to consider alternatives. Nonetheless, although
As this position is easily obtained in the industry. Due to high staff turnover, these lowly paid workers are also required to do extra work. The perception of external pay inequality will increase job dissatisfaction and low morale resulting in poor customer service. To create external pay equity, it is recommended that the organization pay these employees at least at the market rate or preferably slightly above. This will help in staff retention and even attract quality, workers.
Therefore, government could use supply side policies to deal with the unemployment situation such as in interventionist supply-side policies will increase the levels of human capital of an economy by support education and training institutions with subsidies or tax benefits and for market-based supply-side policies will reduce trade union power. Trade union power will lower the costs of production to firms and increase the number of workers that firms may hire. Although supply side policies can decrease unemployment,
The wage spiral occurs as we are getting closer to the maximum employment so people tend to want a higher wage as the competition has reduced. Of course, we can also see that this causes inflationary pressures from GPL1 to GPL2 but this is not necessarily a bad thing as it can be controlled but also because of the higher wages people can afford it. So a higher GDP seems to lead to a higher standard of living. However, we have missed off a vital part of this analysis of a benefit – who it affects. We have