Minimum Wage: Theory And Issues

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-Running Head: Minimum Wage Merrell 1 Minimum Wage Final Draft Economics: Theory, Concepts, Issues-Macro/Micro MG 409 Central Methodist University John Merrell Authors note: Correspondence can be sent to Minimum Wage Merrell 2 The minimum wage has been a hotly contested battle recently with scores of fast food workers staging wild cat strikes as they picket in front of their employers demanding higher wages. Some even carry signs asking for $15.00 per hour; more than double the Federal minimum wage of $7.25 hour. This battle has become a war and this war will ultimately be determined by economics 101; supply and demand. When we look at the minimum wage law we must ask ourselves what…show more content…
$7.25 an hour for full time equates to $15,000 per year which is more than $4,000 over poverty for a single person. Families of four in which both workers earn the minimum wage earn $30,000 for full time which is $6,000 over poverty. Another concern about raising the minimum wage is how it will affect the consumers. How much will a retail store or a fast food restaurant charge? How much will that hotel room be? Can you afford to go to the movies? If minimum wage goes to $15.00 per hour how much do these businesses need to charge to recoup the added fixed cost to their profit matrix? When we look at the laws of economic supply and demand we know that as prices rise people buy less of that product or service. Take gasoline for examples as the price goes up people tend to drive less. These laws of supply and demand also affect business decisions; if wages go up employers will hire less people as this increase in average fixed cost would eat into their marginal revenue. Economists estimate that for every 10% increase in wages workforces are cut by 3% (Danzinger 2009) Minimum Wage Merrell…show more content…
The unions help organize and financially support the efforts of the workers to make more money. Meanwhile the conservative republicans continue to oppose raising the minimum wage citing the exact same concerns their forefathers did back in the 1930s. The reality is whether you support a minimum standard of living or not, the minimum wage as it stands is costing everyone. It drains resources from our economy by forcing workers to rely on public assistance and it cost companies too in the form of high turnover rates. When companies invest in their employees through higher wages and better benefits they realize significant savings through reduced employee

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