Minimum Wage Law: A Case Study
Minimum wage law has a negative effect on the economy
For years, people have constantly relied on government to defend social justice by interfering in the economy. However, these policies can have unintended opposing aftermath. One example of a very popular yet improper regulation is the minimum wage law. Minimum wages have a negative effect on the economy, because the increase of minimum wage results in a repeating scenario of the need to increase the minimum wage. Higher minimum wages lead to a higher charge of living. It furthermore impacts the employment rate. Minimum wages may also lead to lower educated employees.
A growth in minimum wage, turns out in a higher cost of living. The reason is businesses still want to maintain profits and with higher wages the prices of sold goods must be raised. If prices of products go up more money is needed to maintain a certain a standard of living. For example, as the price of product gets higher the living cost increase and another increase will be required (Hovenga, et al., 2013). On the other hand, higher salaries will give people more resources to live from. For instance, if a company could raise prices in a manner they would support profits (Kuehn, 2016). Therefore, higher minimum wages create a negative cycle in which leads to a …show more content…
The solution to this problem is that there should not be a minimum wage law. People should be rewarded on their skill level and productivity. This will motivate people to work harder therefore production cost will decrease. people will be motivated to up their skill lever through education and training. Unemployment will lower because it will be more affordable to employ workers accordingly to their skill level. Minimum wages have a bigger negative effect on the economy than positive. Minimum wage laws should be stopped to brake the endless cycle of higher wages that leads to higher
For years, people have constantly relied on government to defend social justice by interfering in the economy. However, these policies can have unintended opposing aftermath. One example of a very popular yet improper regulation is the minimum wage law. Minimum wages have a negative effect on the economy, because the increase of minimum wage results in a repeating scenario of the need to increase the minimum wage. Higher minimum wages lead to a higher charge of living. It furthermore impacts the employment rate. Minimum wages may also lead to lower educated employees.
A growth in minimum wage, turns out in a higher cost of living. The reason is businesses still want to maintain profits and with higher wages the prices of sold goods must be raised. If prices of products go up more money is needed to maintain a certain a standard of living. For example, as the price of product gets higher the living cost increase and another increase will be required (Hovenga, et al., 2013). On the other hand, higher salaries will give people more resources to live from. For instance, if a company could raise prices in a manner they would support profits (Kuehn, 2016). Therefore, higher minimum wages create a negative cycle in which leads to a …show more content…
The solution to this problem is that there should not be a minimum wage law. People should be rewarded on their skill level and productivity. This will motivate people to work harder therefore production cost will decrease. people will be motivated to up their skill lever through education and training. Unemployment will lower because it will be more affordable to employ workers accordingly to their skill level. Minimum wages have a bigger negative effect on the economy than positive. Minimum wage laws should be stopped to brake the endless cycle of higher wages that leads to higher