Access over 20 million homework & study documents

search

Wage edited

Content type
User Generated
Rating
Showing Page:
1/4
Running Head: Minimum Wage and Unemployment 1
Minimum Wage and Unemployment
Name
Institution
Date

Sign up to view the full document!

lock_open Sign Up
Showing Page:
2/4
Minimum Wage and Unemployment 2
Minimum Wage and Unemployment
Wage floor is the minimum compensation an employer is required to pay to the
employees. The minimum wage varies from one country to another and is dependent on
several factors including the economy. For example, the wage floor in develops countries is
higher than those of developing nations. Currently, the minimum wage set by the federal
government in the U.S. is 7.25 dollars per hour. The wage floor has both a negative and
positive impact on unemployment rates. However, the adverse effects on employment
supersede the positives.
An increase in minimum wage increases the cost of production forcing the companies
to readjust to remain profitable. Labor is one of the essential factors of production necessary
to produce the final product. Businesses compensate their employees with wages based on
several factors. For example, the nature of job, qualifications, and the risks involved are some
of the considerations. However, governments set the wage that these companies have to
observe. The minimum pay is not constant and always goes up every year. Consequently, the
companies react to the increase by reducing the number of employees to maintain the same
expenditure on labor cost (Kaj & Schmutte, 2016). The outcome of reducing the number of
employees by organizations is increased unemployment rate.
The labor demand and supply curve for labor is elastic and respond positively or
negative to the changes in wage. An increase in the lowest compensation in a given field
initiates a change in the labor market as individuals move to the given segment (Arindrajit,
Lester, & Reich, 2016). On the other hand, the government and private firms in that specific
market segment are unable to produce the disproportionate demand for opportunities. In
essence, an increase in wage floor results in a disproportional increase in labor supply
(Arindrajit, Lester, & Reich, 2016). Subsequently, the excess supply leads to a rise in the

Sign up to view the full document!

lock_open Sign Up
Showing Page:
3/4

Sign up to view the full document!

lock_open Sign Up
End of Preview - Want to read all 4 pages?
Access Now
Unformatted Attachment Preview
Running Head: Minimum Wage and Unemployment Minimum Wage and Unemployment Name Institution Date 1 Minimum Wage and Unemployment 2 Minimum Wage and Unemployment Wage floor is the minimum compensation an employer is required to pay to the employees. The minimum wage varies from one country to another and is dependent on several factors including the economy. For example, the wage floor in develops countries is higher than those of developing nations. Currently, the minimum wage set by the federal government in the U.S. is 7.25 dollars per hour. The wage floor has both a negative and positive impact on unemployment rates. However, the adverse effects on employment supersede the positives. An increase in minimum wage increases the cost of production forcing the companies to readjust to remain profitable. Labor is one of the essential factors of production necessary to produce the final product. Businesses compensate their employees with wages based on several factors. For example, the nature of job, qualifications, and the risks involved are some of the considerations. However, governments set the wage that these companies have to observe. The minimum pay is not constant and alwa ...
Purchase document to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Anonymous
I was struggling with this subject, and this helped me a ton!

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4