However, higher minimum wage or increasing price floor on the price of labor leads to job loss and probable magnitude of those losses. It has been predicted by the standard model of competitive labor markets that higher minimum wage is likely to lead to loss of job among low-skilled employees (Meer and West 2015). A binding minimum wage that is set higher as compared to the competitive equilibrium wage decreases employment for two purposes. Firstly, the employers will substitute away from the low-skilled manual labor that is comparatively costly at present towards other inputs that includes capital. Both product and labor demand will be reduced due to higher minimum wage.
A lower debt ratio signifies that the firm depends less on borrowing as compared to equity for financing its assets. Usually, the lower the debt ratio, the lesser is the risk. However, the acceptable levels are different across industries. (AAII, 2010) mentioned that the interest coverage ratio assesses the firm’s ability to pay interest on its outstanding debt. A high number signifies a healthy firm; whereas a ratio below 1 means that the firm is unable to pay its interest obligations due to insufficient earnings.
Total asset turnover ratio helps to show if the company’s assets are helping to encourage sales revenue, thus a high asset turnover ratio implies good use of assets in promoting revenue. Not only is Strong Tie’s total asset turnover decreasing, as of 2008 it is below the industry average by around 40%. Strong Tie fixed asset turnover is also diminishing and well below the industry average. It is important to acknowledge that Strong Tie has been investing a lot into factory automation which means an increase in assets, thus lowering turnover ratios. This might be lowering rates now, but has potential to reduce labor costs and speed up design which are all influential factors in the company’s strategic planning.
Their results indicate that displaced migrant workers do not face relatively long unemployment spells or wage penalties, unlike displaced urban workers. From the evidence of segmented labor markets in urban areas supported the migrant workers movement to different cities has positive impacts in the labor market. Migrant voluntarily change their jobs weather due to the lack of contract form informal jobs, or the long working hour in their new jobs. Ming et al. (2012) examined the relationship between salary and the rate of employee turnover; they discussed that Chinese migrant workers in low status occupations have higher rates of turnover than employees in high status occupation with well paid.
If they raised the price than the people who make minimum would have to make more money so they would have to work two jobs making they spend less time with friends and family. Raising minimum wage would do absolutely nothing because it 's like if you had 2 dollars and something cost 4 you work a week get 20 dollars and then have 22 you can buy it but then the price raises to 26 dollars and so on. Finally people suggest the fact that even if you raise minimum wage than not all people would still want a job and it would be harder to find a job making the poor population either rise because of people getting fired or get better because of people finding
According to Schmitt (2013), the minimum wage has slight or even no noticeable effect on the employment rate in that the cost generated by minimum wage is large relative to most of the firms. Therefore, dismissal might be a common resolution for reducing their financial commitment and causing the rise of the unemployment rate. Apart from the employment aspect, SMW also affects workers’ health in certain extent. Business profits are the first priority in many businessman’s minds; however,
They will be less likely to do drugs, will be more likely to exercise and have a healthier lifestyle. Sometimes emotional and psychological problems can be caused by the stress of having enough money. According to American Journal of Public Health, ¨the premature death rate is about four times higher than that of the much richer financial district..¨ This means that people with higher wages experience less premature deaths. On the other hand, people with low wages have the most premature deaths. A study made in 2014 by the Bay Area
Unemployment is defined as a situation where in a country, citizens who had reach a working age is unable to get employed even though he/she is actively searching for jobs. Unemployment rate is usually used as a measure of the health of the country economy and is measure by the number of unemployed people, divided by the total population of the work force. In general, a country with a lower unemployment rate has a better economy compared to a country with high unemployment rate. When a country faces high unemployment rate, it affects the overall economy, creating a cyclical problem. When people have lesser money to spend because of unemployment, companies suffer from decrease in revenue.
The red line is the demand curve that represents the interest and how firm decides to hire worker. At point W1, we can deduce that the wage is very low which one of the condition for a firm or corporation to be considered as a sweatshop is actually how competitive market works. The salary may seem to be lower compare to point W and point W2. However, the actual effect or the actual benefit is that it increases the amount of jobs as shown at point Q1. People would like to reduce sweatshop with the objective to banish it, but people also contradict their action at the same time.
A potential explanation is that a shift in household’s income to higher levels will introduce households to modern consumption opportunities leading to a decreasing saving rate (Mikesell & Zinser, 1973; Liu & Hu, 2012). The implication of Keynesian theory is that low income households save lower ratio of their income compared to high income families. Different theories, that attempted to explore the relationship between income and saving, were contradictory. For instance, it was found that the poor consume at their subsistence level, yet they often have little saving to smooth consumption in case of income shocks (Schmidt-Hebbel, Webb, & Corsetti, 1992; Meghir,