Sunday, April 21, 2019

Explain how the introduction of a minimum wage may affect the level of Essay

Explain how the ledger entry of a nominal pay may affect the direct of exercise in opening. Examine and critically assess the e - Essay ExampleWhen the government enforces the laws of minimum wages, then the market forces are disgusted and labyrinthine sense ceases to exist creating a gap amidst the drive and supply, which is of push back in this case. The disequilibrium in theory numbers in a educate in the supply of labor but the demand reduces as the labor is now more costly. However, the magnitude by which this disequilibrium is caused depends upon the circumstances prevailing in each economy and varies from boorish to country which we will see later. The diagram to the right shows the labor market curve. When the market forces were independent and not disturbed, the market was in equilibrium that is the supply and demand curve intersected at a point which is cognize as the equilibrium point represented as L0 with the quantity of labor and W0 as the equilibrium wag e rate. However, the market forces were disturbed and the minimum wage rate was introduced with the representation of Wmin. This created disequilibrium in the economy and the supply and demand curves no longer intersect at the equilibrium point. There now is a gap between the demand and supply of labor which is equivalent to L2-L1 and this is the excess labor which is not required. Since the employment has gone raze from L0 to L1, this shows that the implementation of a minimum wage policy results in a decline in unemployment in an economy. Several economists and business owner, small businesses in particular, have voiced their concerns that minimum wages will result in a rise in unemployment. The worst aspect of this rise in unemployment is the fact that the deal who will be most affected are the poor people who are not in any case educated. When the minimum wage policy will be implemented, the costs of hiring on part of the employers will rise and they will be forced to wither cut the current staff or freeze their hiring programs. They mobilize that the poor and uneducated people will be most affected since the policy is affecting unaccompanied them. The educated or wealthy people are already employed on jobs at high management levels and their current wages or salaries are nowhere near the minimum wages. It is the lower level staff whose wages are affected and hence the employers will be forced to take sue against these employees. However, a liberal think tank with the name of Economic Policy Institute have conducted a research and it has suggested that there is little evidence to suggest that there is more or less no difference in the employment levels between states in America in some industries even though there is a difference in the minimum wage rates among the states. This suggests that the shock absorber of an introduction of minimum wage policy is dependent upon other factors as well that is industry to industry in this case. This suggests t hat a minimum wage policy may not have such a significant impact as economists have previously suggested. As a matter of fact, it may even increase employment in some cases because the workers were actually being paid less than the worth of revenue and profits that they were contribute to the firm economically. The findings have gone as far as suggesting that rather than creating disequilibrium in the market as a result of minimum wages, it may even help the market to come nearer to the equilibrium level by forcing the employers to pay a fairer wage to the employees. Furthermore, the employers always have the choice of reducing the supervision, training, and recruitment costs in order to balance

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