The Pros And Cons Of Minimum Wage Laws

792 Words4 Pages
Many countries have implemented minimum wage laws, with the purpose of setting an amount that would help workers who belong to the lower socio-economic strata. These workers are usually the ones that have manual jobs which often pay the least amount of money. To ensure that such workers are not exploited and taken advantage of, governments put up laws which require employers to pay a set amount of money for work done, making it illegal to pay anything lower than the amount set. However, one major economic downside that results in the implementation of such laws is an increase in unemployment which further upsets other economic factors. This, among other things, shows that the introduction of legislation to repeal all minimum wage laws is a good strategic decision for the economy in the long term.
When minimum wage laws are set, disequilibrium occurs as wages are not set where demand equals supply. This increases the costs of hiring workers for businesses which then resort to firing workers or not employing more workers which, consequently, results in an increase in unemployment. This increase in unemployment gives birth to even more complex problems in a society. Not only that, but also, unemployment also affects individuals and countries as a whole. Looking at the costs of unemployment to individuals, it is obvious that unemployed people see a decline in their standards of living. When they remain unemployed for a long period of time, they forget most of what they
Open Document