A firm’s performance is negatively impacted because it hires fewer employees, which decreases output and profit. Consumers and taxpayers end up paying for such costs through higher prices. The ability of the United States to stay globally competitive is diminished, thus efforts to cut costs push many companies to send jobs abroad. In the long-term, members of a union also become affected due to changes in the market environment—e.g. new entrants, including foreign competition within the domestic boundaries, so they may have to adapt to such changes by accepting lower wage rates.
If other things change, then one cannot directly apply supply/demand analysis. Sometimes supply and demand are interconnected, making it impossible to hold other things constant (Colander, The Limitation of Supply/Demand Analysis, 2010). “In supply/demand analysis, you would look at the effect that fall would have on workers’ decisions to supply labor, and on business’s decision to hire workers. However, there are also other effects (Colander, The Limitation of Supply/Demand Analysis, 2010). “For instance, the fall in the wage lowers people’s income and thereby reduces demand.
Today, there is continuing debate over whether the Federal Minimum Wage is truly a fair "living wage.” Minimum wage reformers call on Congress to raise the minimum wage, while their opponents point out the negative effects this could have on the economy. The discussion of minimum wage revolves around several key issues
The government wants low unemployment and high economic growth which are generally linear; however this can cause difficulties in maintaining a stable rate of inflation which is another economic objective. The government wants the unemployment rate to be as low as possible, and often say they try to reach “full employment.” Full employment does not mean that there is nobody left unemployed in the country in a literal sense, it factors out hardcore, frictional, and seasonal unemployment. They do this by stimulating the economy to increase aggregate demand, causing firms to increase their employment in order to increase their supply to meet demand and increase their profit margins. However if unemployment falls below the full employment margin and breaches the NAIRU (non accelerating inflation rate of unemployment” then the economy grows at an unsustainable rate, inflation quickly increases, and this causes problems for the economy such as a reduction of purchasing power for consumers and a vast reduction of real income for individuals on nominal wages. Poor price stability reflects poorly on the government’s economic management.
When people are unemployed it means that they have less money which in returns means that there is a less of a demand in the economy. The government uses the unemployment data that they gather, along with other economic data, in policy making decisions regarding the future course of the economy and whether or not to concentrate efforts to aid those affected by joblessness. A great deal of President Barack Obama's Recovery Act funding is now being released to help stimulate the economy. A large sum of the money has been allocated in order to take on a two-fold approach. The politics circuits have reported that in addition to the money being distributed in order to create jobs, the money will also serve the purpose of improving the quality of life we living
It is frustrating to see how much of a trade off the circle of life is having to sacrifice people’s income in order to get a greater result on a business. Finally, as a result of a so controversial topic I supported, support, and will support the minimum wage. The bad economy that we face today in the country is so depressing that it is not even guarantee if there will be more employment with or without minimum wage. Every day the unemployment increases, inflation increases, poverty increases, crime increases, etc. Moreover, with a minimum wage there is a big portion of the population of the country unemployed, now I think what it will be if there is not a set minimum wage.
Lauren Walker The debates held over aspects of the economy, especially minimum wage, are too numerous to count. The question these days is whether the government should raise the minimum wage or not. To be honest, I believe our country would be better off without a minimum wage, and let businesses decide for themselves what to pay their employers. There are several reasons to be against this claim, but there a subsequent reasons for it, reasons that define a stable economy. Having a minimum wage in our country limits the efficiency of businesses, limits the availability of jobs to citizens because of illegal immigrants, and even drives some people out of business.
The author of the article titled Arguments for Raising Minimum wage, Sue-Lynn Cathy, addresses poverty and how to fight it. Sue suggests that a minimum wage increase would help individuals that are considered a part of the “near poor” category move out of poverty entirely and to keep it that way permanently. I agree with Sue’s stance on this argument, I think that it would help people who are in poverty, and really would not only be beneficial to us as individuals, but as a nation as well. Supply-side politicians generally argue that a minimum wage is bad for the economy because of the fact that it artificially pushes up income levels, and that in time it is bad for business and will lead to inflation, and also inefficient capital markets. Joyce Hanson, author of Four Arguments for Raising the National Minimum Wage, gives four reasons as to why our national minimum wage should be raised such as the following: 1.
o Another argument is that firms in developing countries keep costs down by paying their workers depressed wages and by subjecting them to inhumane work environments. Hence limiting the imports of such goods discourages such exploitation. Employment protection o Engagement in international trade often results in structural unemployment as workers in the contracting sectors may lack the skills to transit to the expanding sectors o Temporary protectionist measures allow such
Economic efficiency is an important part to economic balance. Economic efficiency can be defined as “The state of an economy in which no one can be made better off without someone being worse off” [ (Bannock, Baxter, & Davies, 2003) ]. The reason why this is so important is that it is difficult to maintain a perfect balance in economics. Think of it as a scale that has two different trays. If something is added or taken away from one side or the other, the trays may rise or fall based upon the significance of what was changed.