Minimum wages were introduced to assist employees from being exploited, but is it affect-ing employees opportunity to find work? Minimum wages are set to prevent low paid work-ers from being exploited by their employers who would pay them otherwise. The minimum wage is “a level of pay for workers, usually set by the government or collective bargaining” (Minimum wage, 2015). Economists believe minimum wages are the cause of unemploy-ment. If employers were allowed to ‘fall below the minimum level some employers would be prepared to take on more worker’s” (Minimum wage, 2015).
A Binding floor price is when the price is raised above the equilibrium causing individuals to pay the higher price or to leave the market depending on the product significance. …show more content…
This characterisation is valid, if the wage price floor on unskilled workers is above the equilibrium price unemployment would occur. This is because the quantity demanded is far less than the quantity supplied causing a shortage in jobs leaving people unemployed. “For an entire industry, total employment is predicted to fall and product price is predicted to rise in response to an increase in a binding minimum wage” (Card, D., & B. Krueger, A, 1994). Although if it is kept like this the employees would have higher wages. Minimum wage is a binding floor price just like the common floor price used in agriculture to protect farmers, it is the same concept for minimum wage in order for the minimum price that can be paid for …show more content…
This causes jobs to be lost and higher unemployment numbers establish-ing it to be harder to gain a job for the unemployed. In Australia there was an increase in the legal minimum wage from $16.87 to $17.29 per hour in 2016. Due to this increase there was an adjustment in the unemployment rate from 5.8 percent in 2015 raising to 6 percent in 2016.
Increasing the minimum wage will help the highly skilled and productive workers because of their efficiency creating more revenue for the business. Although without an increase in the minimum wage the more productive workers are better off compared to unskilled or unemployed people. They are better off because the owner of the firm will give them a reward by increasing the individuals wage, or an opposing company will approach and give the employee a higher wage. Thus an increase in the minimum wage will help skilled employees which have a high production
A Binding floor price is when the price is raised above the equilibrium causing individuals to pay the higher price or to leave the market depending on the product significance. …show more content…
This characterisation is valid, if the wage price floor on unskilled workers is above the equilibrium price unemployment would occur. This is because the quantity demanded is far less than the quantity supplied causing a shortage in jobs leaving people unemployed. “For an entire industry, total employment is predicted to fall and product price is predicted to rise in response to an increase in a binding minimum wage” (Card, D., & B. Krueger, A, 1994). Although if it is kept like this the employees would have higher wages. Minimum wage is a binding floor price just like the common floor price used in agriculture to protect farmers, it is the same concept for minimum wage in order for the minimum price that can be paid for …show more content…
This causes jobs to be lost and higher unemployment numbers establish-ing it to be harder to gain a job for the unemployed. In Australia there was an increase in the legal minimum wage from $16.87 to $17.29 per hour in 2016. Due to this increase there was an adjustment in the unemployment rate from 5.8 percent in 2015 raising to 6 percent in 2016.
Increasing the minimum wage will help the highly skilled and productive workers because of their efficiency creating more revenue for the business. Although without an increase in the minimum wage the more productive workers are better off compared to unskilled or unemployed people. They are better off because the owner of the firm will give them a reward by increasing the individuals wage, or an opposing company will approach and give the employee a higher wage. Thus an increase in the minimum wage will help skilled employees which have a high production