It is frequently proposed by members of society to raise the minimum wage. It sounds like a great idea initially since it will have people earning a little bit more money per hour. How much is that little bit extra money actually costing these people? More than the people battling for the raise even realize. There are reasons why a minimum wage exists. It is a price floor as to maintain a stable economy, helps prevent inflation, and increases job availability. If the minimum wage is increased, then society will see significant negative impacts on daily life because increasing the amount earned per hour doesn’t mean having more value.
In economics, a “price floor imposes a price above market equilibrium, causing quantity supplied to exceed quantity demanded resulting in a surplus”1. Minimum wage is a perfect example of a price floor and explains why it shouldn’t be raised. If the minimum wage is raised above the equilibrium it is currently at, it will lead to increase in wage rates but a decrease in employment. Specifically …show more content…
L. Martin. In it, he explains how raising the minimum wage will “exceed equilibrium market-clearing levels accompanied by unemployment rates that are well above their natural levels…because employers will tend to hire fewer workers under these conditions.”5 This then causes “labor [to] migrate from low to high-wage regions”5 leaving whoever can’t afford to leave to low income region in the dust and stuck in poverty. In his closing remarks, Clark concludes that “unemployment itself is not found to have as much influence on wages as wages have on unemployment.”5 This is a powerful statement that emphasizes how raising the minimum wage will not reduce unemployment, but increase unemployment percentage, thus leading to things such as deviance and day to day struggles to survive in an ever increasingly costly
In economics, a “price floor imposes a price above market equilibrium, causing quantity supplied to exceed quantity demanded resulting in a surplus”1. Minimum wage is a perfect example of a price floor and explains why it shouldn’t be raised. If the minimum wage is raised above the equilibrium it is currently at, it will lead to increase in wage rates but a decrease in employment. Specifically …show more content…
L. Martin. In it, he explains how raising the minimum wage will “exceed equilibrium market-clearing levels accompanied by unemployment rates that are well above their natural levels…because employers will tend to hire fewer workers under these conditions.”5 This then causes “labor [to] migrate from low to high-wage regions”5 leaving whoever can’t afford to leave to low income region in the dust and stuck in poverty. In his closing remarks, Clark concludes that “unemployment itself is not found to have as much influence on wages as wages have on unemployment.”5 This is a powerful statement that emphasizes how raising the minimum wage will not reduce unemployment, but increase unemployment percentage, thus leading to things such as deviance and day to day struggles to survive in an ever increasingly costly