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This creates a knock-on effect wherein this spending fuels hiring at other companies, whose workers also spend. In contrast, the additional profits earned by corporations as a result abolishing the minimum wage could be invested anywhere in the world and capital gains from stock price improvements are taxed at a relatively low rate. Without a minimum wage, there would be more Americans working, but they would not make enough money to survive. This could have a number of impacts. Many workers would exit the job market, choosing instead to rely on social assistance. Others would turn to criminal enterprise or find ways to work in the underground economy. If too many Americans earn insufficient amounts to survive, there could even be deflationary pressure as prices will need to come down to the level of these workers.
The government, when considering the issue of a minimum wage, must weigh the benefits to the economy as a whole vs. The direct revenue benefits to the government,...
The weight of economic evidence leans against the idea of the minimum wage. The minimum wage itself is a form of intervention in the markets, so from a purely economic perspective the minimum wage should be abolished. That is exists is a reflection of the intrusion of non-economic considerations, which are natural for a government that is attempting to balance a number of different objectives, not all of them purely economic in nature.
Works Cited:
Dimock, M. (2006). Maximum support for raising the minimum wage. Pew Center Research Publications. Retrieved September 20, 2011 from http://pewresearch.org/pubs/18/maximum-support-for-raising-the-minimum
Garfield, R. (1996). The case against a higher minimum wage. Joint Economic Committee Report. Retrieved September 20, 2011 from http://www.house.gov/jec/cost-gov/regs/minimum/against/against.htm
Works Cited:
Dimock, M. (2006). Maximum support for raising the minimum wage. Pew Center Research Publications. Retrieved September 20, 2011 from http://pewresearch.org/pubs/18/maximum-support-for-raising-the-minimum
Garfield, R. (1996). The case against a higher minimum wage. Joint Economic Committee Report. Retrieved September 20, 2011 from http://www.house.gov/jec/cost-gov/regs/minimum/against/against.htm
Minimum Wage Even though minimum wage has been around for many years, and was established to make sure that working people could survive and pay their bills, there are still many problems with it. This paper address both the pros and cons to raising the minimum wage, discussing not only how people can be helped by the increase in pay, but also how they are ultimately hurt by it to a
Minimum Wage Why the minimum wage should not be abolished in the United States. There are diverse issues that have been debated by politicians and critics concerning the minimum wage in the United States. Some say that the minimum wage causes an increase in the unemployment rate. In turn, it causes negative effects on the nation's economy. However, the truth on this proposition is still to be proven yet. Taking the side
The company can also allow a position to go unfilled for a time to increase its leverage; the unskilled worker would starve trying to stall for a higher wage. This again invalidates the argument that the free market can set wages effectively -- it cannot given the imbalance of bargaining power between workers and businesses. The minimum wage serves a specific economic role of balancing the bargaining power between
Only 2.1% of minimum-wage workers belong to a union, versus 12.0% of the overall working population. Nonetheless, labor unions fight passionately for a higher minimum wage (Sherk). When the minimum wage rises, it becomes more expensive to hire unskilled workers. This makes the decision to employ highly paid and highly skilled workers, instead of unskilled workers, more attractive to businesses, and so businesses want to hire more skilled workers (Sherk). With
Minimum wage laws have always had a high price to pay. Essentially, there are a number of costs associated with governments implementing minimum wages on an otherwise free labor market. First, there is the issue of reconciling increased labor costs with static production profits. According to the research, "Minimum wage increases make unskilled workers more expensive relative to all other factors of production," (Gorman 2008). The increase in wages can
" However, the theoretical evidence that is provided in this article, to disprove other people's theory on the impact of minimum wage on the economy, seems to have the opposite effect. Statements about the, "…simplistic observation that some of the states with high minimum wages also have high unemployment rates," (http://www.epi.org/publications/entry/briefingpapers_bp150) are not completely disproved with the evidence provided to show no correlation with minimum wage and the job market.