Minimum Wage Policy Essay
Wage is the compensation paid by the employer to an employee in exchange for finished the work. The fact that there is not all the employer paid the corresponding amount for the employee. Before the minimum wage policy was proposed and implemented, there are some employers would take advantage of workers by underpaying them. That is the reason why most of the countries enforced minimum wage policy and let employees are protected by the policy that receives a certain minimum amount for their labor. However, minimum wage policy will cause some influences in the society.
Firstly, minimum wage policy can provide an acceptable standard of living for workers. According to the Dube, Naidu, & Reich (2007), the implementation of minimum wage policy …show more content…
When the minimum wage policy was implemented, companies may try to increase the price of products to balance the wage of employees increase. In addition, workers may have more money to spend under the minimum wage policy. Companies tend to take advantage of this situation to increase the price of goods. Then will cause the inflation of the price. Workers may lose the wage gain as the prices on the market are higher and need more money to buy the same amount of goods.
Finally, minimum wage policy disrupts the economic system. According to the book "Minimum Wage" written by Neumark & Wascher (2010), it claims that non-price competition, such as worker’s personal connection, experience or age, would replace the price competition. Increasing wage level than the equilibrium would disrupt the price mechanism. When the price competition replaced by the human competition, it causes that unskilled and younger individuals hard to find the work. It is damaging to the labor market which the companies according to the human competition to employ the worker.
Minimum wage policy has both advantages and disadvantages to the society. While it may improve the quality of lower-income workers, increase worker productivity and increase the consumption; however, it might cause the unemployment, inflation and disrupts the economic system in the
Firstly, minimum wage policy can provide an acceptable standard of living for workers. According to the Dube, Naidu, & Reich (2007), the implementation of minimum wage policy …show more content…
When the minimum wage policy was implemented, companies may try to increase the price of products to balance the wage of employees increase. In addition, workers may have more money to spend under the minimum wage policy. Companies tend to take advantage of this situation to increase the price of goods. Then will cause the inflation of the price. Workers may lose the wage gain as the prices on the market are higher and need more money to buy the same amount of goods.
Finally, minimum wage policy disrupts the economic system. According to the book "Minimum Wage" written by Neumark & Wascher (2010), it claims that non-price competition, such as worker’s personal connection, experience or age, would replace the price competition. Increasing wage level than the equilibrium would disrupt the price mechanism. When the price competition replaced by the human competition, it causes that unskilled and younger individuals hard to find the work. It is damaging to the labor market which the companies according to the human competition to employ the worker.
Minimum wage policy has both advantages and disadvantages to the society. While it may improve the quality of lower-income workers, increase worker productivity and increase the consumption; however, it might cause the unemployment, inflation and disrupts the economic system in the