It is not always as good for the economy, as we think it is, because it creates surpluses, wasteful increases in quality, lost gains from trade and misallocation of resources. Minimum wage is one of the examples of a price floor. It is the lowest wage an employer may pay an employee and it is determined by law or contract. Increasing the minimum wage might seem like a great idea. However, it comes with many disadvantages.
With the decrease in poverty you will also see a decrease in government spending on welfare items because the individuals receiving the higher wage in theory will be able to pay for these services/welfare items without assistance. Another potential benefit of an increased
Conventional economic theory predicts that a rise in the minimum wage leads employers to reduce employment in a competitive equilibrium (Stigler, 1946). However a growing number of studies indicate that the relationship between minimum wage and unemployment is not necessarily always negative (Katz and Krueger, 1992; Card, 1992 a, b). Before discussing the impact of the national minimum wage legislation in South Africa, let us first understand the concept in terms of the economic theory. ECONOMIC THEORY The labour market includes workers and firms as participants. Workers supply labour to firms in exchange for wages, and firms demand labour also in exchange for wages.
If we raise the minimum wage, not only are jobs going to be lost. But middle-class is not going to be so middle class any more. What really happens if we raise minimum wage, is it doesn’t affect the rich people, but it definitely affects the middle-class, considering that 's where a majority portion of the money is taken
I think the federal minimum wage should be increased. The minimum wage is basically the lowest wage permitted by law or a special agreement. In this essay, I will write about three reasons the minimum wage is good for us all. The first reason is because it helps those that are poor. The second reason is because it is good for the economy.
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
This would be one of the main benefits, when comparing to socialism and capitalism. The article, “Only Communism Can Make Poverty History” brings to light, “What workers sell to the capitalist in return for their wages is their ability to work, or their labour power. This labour power is able to produce more value than the value required to reproduce it” (1). What this is saying, is essentially, there will always be some sort of lower- poverty stricken class with capitalism. That workers in the lower class and middle class are employed by the upper class and are getting paid for less than what their work sells for.
The functionalist believe that poverty is a necessity to society in that those that are qualified for jobs are given those jobs. Since those in poverty aren 't given the same educational opportunities as those that are considered wealthy, they can 't get jobs that need higher qualifications. Poverty helps to keep those who have the qualifications in the jobs that require them thus helping society to function. The functionalist perspective believes poverty helps society keep moving, so it also believes that no one should try to alleviate poverty. This perspective doesn 't do well with change because it believes that every part of society is needed no matter how bad it can be for people.
The main “common sense” argument is that by imposing minimum wages, one artificially raises the price of labour way from its “market-clearing” level and higher unemployment results-and the first to lose their jobs will be the least-skilled workers (city press;2014/11/25). The national minimum wage is a step towards an alternative growth path, in other words wages must be set to target productivity and efficiency. But it must be accompanied by other alternatives; such as industrial policy that sees that South Africa create jobs in sectors that can sustain moderately higher wages, and grow sectors that can benefit from, and contribute to, increased domestic demand (city press;2014/11/25). However national minimum wages promote equality, combat poverty and support economic development e.g. in Brazil during Lula’s tenure as president, the statutory minimum wage rose
As hypothesized, the result revealed that the more insecure employment was, the less workers felt affiliated to society regarding to both within and between effects. Also, social well-being is related to the type of employment. While difference of integrative function between workers with fixed-term and permanent contract was small, that of social well-being still existed. Therefore, they suggest that flexible contracts and low wage can deteriorate social exclusion. They also suggest that future studies investigate the relationship of job security and social cohesion with comparative perspective, considering recent situations after the economic