Presentation Minimum Wage
The Business of the Minimum Wage
• Quantity demanded of
employees decreases when quantity supplied of potential employees increases, as minimum wage increases from $7.25 to $10.10.
• The green dot shows original equilibrium, when minimum wage was at $7.25.
Raising Minimum Wage:
WHO
GAINS
WHO
LOSES
•Government receives higher income tax due to increase in wages.
•Low income families are likely to receive more positive impact from new increase wages.
•Potential workers may face potentially unemployment since now employers may not hire as many employees due to increased wage expenses.
•Consumers ends up paying a high price for goods and services.
•Job market will shrink due to employers reacting to increased wage expenses.
DIFFERENCE •Inflation rate will increase.
IN IMPACT
ASSESSMENT
•Pros: To stimulate employers competition and to reduce lower labor turnover
•Cons: The positive impacts of a new minimum wage is short-lived since costs and prices will react to this change.
Wage => Cost => End Price
IS RAISING MINIMUM WAGE A GOOD IDEA?
No, because the consequences outweigh the benefits. At first glance, the benefits are positive, but are in fact superficial. In the long-run, the positive impacts are minimal.
Bibliography
• Romer, C.D., March 2, 2013. The Business of the
Minimum Wage. The New York Times, Retrieved from http://www.nytimes.com/2013/03/03/business/theminimum-wage-employment-and-incomedistribution.html?pagewanted=all&_r=0 • “Los Angeles Minimum-Wage Boost Seen as Policy
Test,” The Wall Street
Journal,http://online.wsj.com/articles/los-angelesminimum-wage-boost-seen-as-policy-test-1412289059
• Quantity demanded of
employees decreases when quantity supplied of potential employees increases, as minimum wage increases from $7.25 to $10.10.
• The green dot shows original equilibrium, when minimum wage was at $7.25.
Raising Minimum Wage:
WHO
GAINS
WHO
LOSES
•Government receives higher income tax due to increase in wages.
•Low income families are likely to receive more positive impact from new increase wages.
•Potential workers may face potentially unemployment since now employers may not hire as many employees due to increased wage expenses.
•Consumers ends up paying a high price for goods and services.
•Job market will shrink due to employers reacting to increased wage expenses.
DIFFERENCE •Inflation rate will increase.
IN IMPACT
ASSESSMENT
•Pros: To stimulate employers competition and to reduce lower labor turnover
•Cons: The positive impacts of a new minimum wage is short-lived since costs and prices will react to this change.
Wage => Cost => End Price
IS RAISING MINIMUM WAGE A GOOD IDEA?
No, because the consequences outweigh the benefits. At first glance, the benefits are positive, but are in fact superficial. In the long-run, the positive impacts are minimal.
Bibliography
• Romer, C.D., March 2, 2013. The Business of the
Minimum Wage. The New York Times, Retrieved from http://www.nytimes.com/2013/03/03/business/theminimum-wage-employment-and-incomedistribution.html?pagewanted=all&_r=0 • “Los Angeles Minimum-Wage Boost Seen as Policy
Test,” The Wall Street
Journal,http://online.wsj.com/articles/los-angelesminimum-wage-boost-seen-as-policy-test-1412289059