Price Control on Minimum Wage

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Marissa Allison Research Project: Price Control on Minimum Wage Bryant & Stratton College ECON220 Prof. Gibson 19 April 2013 One price control is a government regulation of prices by establishing maximum price levels for goods or services, most commonly during a period of inflation. The consequence of the effective maximum price control is for a shortage to emerge as quantity demanded exceeds quantity supplied. Minimum wage is a common economic policy topic that affects the income of working citizens. Nations use minimum wage policies in order for individuals to maintain a minimum quality of life. Minimum wage laws can have several positive or negative affects in the economy. The U.S. Congress passed a minimum wage law in 1938 and has raised its level and extended its coverage several times since then. The stated goal of the minimum wage is to help the poor. It will not directly affect most workers because they have wages that are above the minimum. Only those workers who are earning less than the minimum will be directly affected. The government believes that increasing the minimum wage will benefit the poor. It is true that some people will receive higher wages if the minimum wage rate is raised, but those receiving higher wages can only do so at the expense of others who will become unemployed. Minimum wage is a basic government-imposed price control. With the minimum wage price controls, a floor is set which indicates a minimum price that must be paid for certain goods or services. Governments set price controls so that individuals receive a fair wage at work. Minimum wage positions usually require basic skills. Companies that pay workers the minimum wage may be able to avoid offering employment benefits. Currently, employers are required to pay their employees a minimum wage of at least $7.85 an hour. Minimum wage also allows employers to use more
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