ipl-logo

Minimum Wage Case Study

653 Words3 Pages

The general minimum wage in the province of Ontario as of October 1st, 2015, is $11.25 per hour (“Minimum Wage”). The intent of a minimum wage price floor is to ensure a minimum standard of living for the labour market (“Section 4: Discussion of Minimum Wage Policy Options for Ontario”). The price floor serves as a threshold, in which wages cannot fall under. The discussion of maintaining or raising the minimum wage is an often contested topic. This essay will delve into the benefits of maintaining the current price floor on minimum wage in Ontario.
Firstly, in raising the price floor on minimum wage by hypothetically $4, it will in fact distort the market. If a price floor is set above the equilibrium price then it will cause a surplus (“Chapter …show more content…

Small businesses need employees in order to run effectively and produce a fair amount of profit. A hypothetical $4 spike in the floor price of minimum wage will be drastic. If they are unable to afford the kind of automation which would allow them to lay off employees, then small businesses such as, restaurants; would be forced to reduce expenses in other places for instance by raising menu prices, sourcing poorer ingredients and/or reducing operating hours, (“Why Are So Many Seattle Restaurants Closing Lately?”) in order to compensate for the profit loss obtained by the increased minimum wage. If these small businesses are not able to cope with this change, then they will easily be put out of business. This would then consequently result in job loss. As well, it will lessen the variety in the market of goods and services available to consumers, hence, stunting economic …show more content…

In order to maximize profits, an employer will hire someone who will bring in enough revenue to justify the higher paycheck. By this theory, an employer would have no motive to hire an unexperienced individual, which would make it increasingly harder for young people entering the workforce to build a resume and gain valuable work experience, which would let them work their way up the career ladder. In this, the higher price floor discourages businesses from hiring low skill workers that may be in poverty and helping them into higher-paying jobs. (“Minimum Wage Hikes Hurt Unskilled and Disadvantaged Workers' Job Prospects”). Inevitably, this will increase the unemployment in lower-skilled individuals which is representative of a waste of human potential and an inefficient

Show More
Related

  • What Are The Pros And Cons Of Raising Minimum Wage

    177 Words  | 1 Pages

    One of the cons to increasing the minimum wage is that it helps larger corporations and hurts smaller businesses, therefore, competition is decreased. The bigger companies use raising wages acts as a barrier to entry to new business entering the market and create a monopoly for larger companies who have more profits to afford the increase. An example of this is Wal-Mart, who can afford to pay employees nine dollars and twenty cents an hour but a little store such as Meijer 's who does not make as much profit would limit their hiring of new employees and would cut hours to compensate. A family store might decide that the cost of entering the market is too high to endure as they build up their clientele and develop their business they decide not

    Read More

  • Summary Of Minimum Wage Hurt Low Income Workers By Jame Sherk

    646 Words  | 3 Pages

    In the article, “Minimum Wage Hikes Hurt Low-Income Workers,” Jame Sherk debates how an increase in the minimum wage would impact workers and corporations. Sherk builds his argument by first explaining the recent history of an increasing minimum wage and how much it has risen. Following, he argues why it would hurt businesses and low-income workers. Lastly, after illustrating the consequences, he offers statistical evidence to support his claim and to prove to the reader why the hike would only hurt both businesses and low-income workers. Sherk’s use of evidence and explanation offers a strong argument and a clear stance.

    Read More

  • Bernie Sanders Minimum Wage Analysis

    1560 Words  | 7 Pages

    The wage rate would be so high employers would not be able to afford all the money they have to pay out to the workers, so they have to cut off some people. Contrasting that thought, a quote that states “increasing the minimum wage may also spur businesses to operate more efficiently and employees to work harder.”. This quote is stating that if there were less employees than the employees are going to work harder as it is technically more economically efficient that way .Yes, this is true, but they will “ have” to work harder to keep up with the same amount of output as before because 5 is more than 3 as hard as that is to picture. This also places a larger responsibility on the remaining few because now if there is a weak link then the ship is really going to sink. Plus, in the bigger picture people are losing their jobs from

    Read More

  • Minimum Wage Cons

    75 Words  | 1 Pages

    Raising the minimum wage will allow society to keep up with inflation, extract people out of poverty, and stimulate the economy. Even though there are some negatives to increasing the wage, many of the opposing arguments have been found to be false or even have had the opposite effect. Increasing the wage will be beneficial to the workers as well as the businesses, making the wage increase a positive change in the United States economy.

    Read More

  • Minimum Wage In Texas

    1993 Words  | 8 Pages

    Minimum wage would raise the wages of many workers and increment benefits what disadvantaged workers. An estimated 6.9 million workers would receive an incrementation in their hourly wage if the minimum rage were raised to $10.15 by 2015. Due to the spill over effect the 10.5 million workers earning up to a dollar above minimum wage would withal be liable to benefit from an incrementation. Women are the most astronomically immense group of beneficiaries from a minimum wage increase. Sixty percent of workers who would benefit from an incrementation are women.

    Read More

  • Minimum Wage In America

    885 Words  | 4 Pages

    And on April 1, 1991, the minimum wage hit an all-time high of $4.25 an hour as explained by Lawrence Katz (6). In his findings regarding his article, Lawrence Katz states that "the evidence on employment and price changes does not seem consistent with a conventional view of the effects of increases in a binding minimum wage” (20). By this, Katz is trying to state that even though the minimum wage increased in the early 1990s, the increase had an adverse effect in which employment to the fast food industry increased in Texas, where he conducted his research. He also concluded that the changing in prices in the businesses he researched were not directly associated the minimum wage increase. Looking back at this research, it seems as though the constant increases in the minimum wage shows how strong our economy has become.

    Read More

  • Minimum Wage Raising

    1504 Words  | 7 Pages

    Also, it might take time for employers of many low-skill workers to learn how to economize on their labor costs. They will over time since the incentives to do so are much larger and that would be bad news for the very low skill workers the higher minimum wage is designed to help. Whenever increasing the minimum wage is discussed, there is always a concern that doing so might hurt job growth or imperil businesses that employ low-wage workers business they have to pay their works more and that could be hard for some business or companies. The effect of increasing the minimum wage on employment is probably the most studied topic in labor economics because the government has to worry about inflation and prices going up and also the consensus of the literature is that moderate increases in the minimum wage have little to no effect on employment.

    Read More

  • Raising Minimum Wage Increase In The United States

    752 Words  | 4 Pages

    Many people, form state legislators to various interest groups, in the United States are advocating increasing the minimum wage. There are several reasons for this, including the thought of it boosting the economy out of recession. Some other reasons are that it will improve the standard of living, boost consumer buying power, and provide a more stable and productive workforce. While these reasons are good in theory, raising minimum wage can be detrimental to small businesses and the economy.

    Read More

  • Raising Minimum Wage Jobs

    799 Words  | 4 Pages

    According to Don’t Raise Minimum Wage written by Sean McGarvey, by raising the minimum wage less jobs will become available to laborers causing an inflation in prices to buyers. If the wages increase large corporations such as McDonalds and Walmart will lay off the majority of their workers in order to pay for the other employees raise. The employees that get laid off are often the ones that are too young and inexperienced to better the company. This could prevent teens and less experienced laborers from getting jobs. These companies also could higher their prices on their products in order to pay for the raises for their employees.

    Read More

  • Persuasive Essay On Minimum Wage

    607 Words  | 3 Pages

    An increase on minimum wage will hurt the economy and low-wage workers. Although the minimum wage is believed to bring many families out of poverty, according to the CBO, if the minimum wage rises, as much a s one million jobs will no longer be available to people. CBO uses a television ad to illustrate why an increase on minimum wage would not benefit the poor. In the ad, a waiter is replaced by an iPad.

    Read More

  • Increasing Minimum Wage

    1343 Words  | 6 Pages

    Increasing the minimum wage can be a component that make the economic stability, because it is beneficial to the labor market by providing more job opportunities and also the business by raising employee performance. In the case of the minimum wage had increased, low paid jobs have higher paid, then more people are willing to work that kind of jobs. Therefore, the humble jobs or other low paid jobs can hire enough people, and provide work opportunities. In fact, increase minimum wage will not increase unemployment, and in contrast, people will have more work opportunities. It is because economist had proved that increasing the minimum wage will not affect unemployment, and also some business such as retail store will hire more people when more people are willing to buy goods.

    Read More

  • Australian Labour Policy Essay

    794 Words  | 4 Pages

    The government sets minimum wage as a price floor. At minimum wage the quantity of labour demanded is QD and the quantity supplied is QS. The minimum wage increase stimulates consumer spending due to increased disposable income, consequently boosting the Australian economy. The minimum wage has negative effects on the economy, such as increased unemployment as businesses adjust their workforce, by reducing hires and limiting hours of work to manage the increased labour costs. The inflationary pressures caused by an increase in minimum wage are a source of cost-push inflation and the wage-price spiral.

    Read More

  • Minimum Wage Debate Essay

    954 Words  | 4 Pages

    The first job I ever had was working at a small business. I began to wonder if raising minimum wage would make it difficult for small businesses to pay their employees. Is raising minimum wage a

    Read More

  • Essay On Increase In Minimum Wage

    704 Words  | 3 Pages

    Many argue that an increase in minimum wage will help guide low skilled workers out of poverty and assist them into having a better career. That is not necessarily true, Many economists can agree that minimum wage jobs such as cashiers, host or a hostess are not jobs that meant to support a family. If anything by raising the minimum wage, it will put more people in poverty than guide them out of poverty. A raise in minimum wage will cause loss of jobs, an increase in the inflation rate, increase in

    Read More

  • How Can Minimum Wage Be Disastrous For Americans

    961 Words  | 4 Pages

    For instance, from the article “The effects of minimum wage” by David Neumark states that employers will try to keep away from low-skilled workers if the wage were to increase because it would cause them to be wasting money to train them; especially for students and high school graduates who are in absence of any work experience. With minimum wage increasing for the past couple of years it makes it difficult on employers who run small businesses to hire more new workers because they too are also citizens that have to pay their taxes and extra just to keep their business up and running. Such as the author Gina Kim who wrote the article “Minimum wage: helpful or harmful for small businesses” states that 85% of small businesses pay workers a bit more than the minimum to keep their workers interested in the job and they have to make profits out of their business to keep it on track. These businesses cannot innovate if the wage increases because then the labor market will pick up the prices on materials as well creating more of a problem for small business owners to keeping their company open for as long as possible and their solution would be to not hire a lot of employees. This pretty much explains the reasoning about how it will be troublesome for new fresh workers trying to just gain experience and get hard earned

    Read More

More about Minimum Wage Case Study

Open Document