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The paper reveals that although increases in minimum wage are often requested under the social concept of increasing the living standards of the poor, poverty rates will not be reduced. On the contrary, the paper shows how the increase may easily generate negative effects upon the poor. The paper explains the economic theory that an increase in the minimum wage will result in a decrease in demand for labor force, increased retail prices and increased inflation. However, the paper relates that increasing the minimum wage may motivate the youth to abandon their education and focus on getting jobs, which now pay more than in the past.
From the Paper:"The minimum wage is the lowest sum of money an employer can offer in remuneration for the services of the employees. This is often established by the state powers, namely the departments of labor within the federal governments. Some countries implement a minimum wage for all workers, whereas other states differentiate it based on educational attainment. In these countries for instance, the college graduates cannot be employed for a salary lower than that decided by the government, which is often higher than the minimum wage established for the high school graduates. In each case, the minimum wage has direct and indirect implications upon the country's economy in the meaning that a modification in the minimum wage is likely to draw a modification in other economic features, such as labor force demand or inflation."
Sample of Sources Used:
- Kersey, P., The Economic Effects of the Minimum Wage, The Heritage Foundation, 2004, http://www.heritage.org/Research/Labor/tst042904a.cfm last accessed on November 10, 2008
- Kibbe, M., The Minimum Wage: Washington's Perennial Myth, Cato Policy Analysis, No. 106, May 23, 1988
- Neumark, D., The Economic Effects of Minimum Wages, Policy Study, No. 2, October 2, 2006
- Williams, W., The State Against Blacks, The McGraw Hill Companies, 1982
- Business: The Economy: Economy Reports - How Would the Minimum Wage Affect Us? BBC News, June 11, 1998
Cite this Analytical Essay:
Minimum Wages and Their Effect on the Economy (2010, July 30) Retrieved July 16, 2020, from https://www.academon.com/analytical-essay/minimum-wages-and-their-effect-on-the-economy-128643/
"Minimum Wages and Their Effect on the Economy" 30 July 2010. Web. 16 July. 2020. <https://www.academon.com/analytical-essay/minimum-wages-and-their-effect-on-the-economy-128643/>