Economics Essay Help

Question

Write an Essay about the “Impacts of raising the minimum wage”, and you MUST use the article in this link: https://www.theguardian.com/money/us-money-blog/2015/apr/16/will-raising-minimum-wage-be-a-curse-or-blessing-only-one-way-to-find-out. The title is “Will raising minimum wage be a curse or blessing? Only one way to find out”. The article needs to be analyzed in the paper, and it also needs to connect to the content that we recently studied in the class (there are some information like “class presentation, required readings” in the Additional materials). The whole introduction of this essay is also in the additional materials, and there’s also a grading rubric to help you improve the quality of the paper. Please read that introduction carefully and follow the requirements. Remember: you need to touch on the second topic too, you must address both topics as per the attached instructions file.

Answer

The Impacts of Raising the Minimum Wage

The minimum wage is a controversial issue that has quickly gained currency among policymakers as a means of combating income inequality by increasing wages. Essentially, this heated debate is focused on the postulation of whether raising the minimum wage will trigger jobs losses among the majority of the populace as well as the accompanying snowball effects. All in all, empirical research seems to point to contradictory evidence that backs up both sides of this subject. As such, it is imperative that an appropriate balance is struck between weighing against the cost of potential job losses and the benefits accrued from a higher minimum wage to other workers.

            In “Will raising minimum wage be a curse or blessing? Only one way to find out”McGee highlights both the pros and cons of raising the minimum wage and even cites collaborative evidence from states and cities that have implemented wage hikes for both business owners and single markets. The author confidently opposes the idea that raising the minimum wage in any market scenario will cripple the economy substantially by bringing it to a standstill. She gives the example of Santa Fe, where the wage law was enforced required employers to pay their workers $8.50 per hour back in 2003, yet this did not result in an economy downturn as many suggested. If anything, the economy transitioned in a positive direction, though business owners shifted blame to higher labor costs following the introduction of the current $10.66 per hour wage (McGee).  In a similar case, despite all the fretting from business owners about increasing the minimum wage, the implementation of the new wage (currently at $10.15 per hour) led to a massive decline in the rate of unemployment. Additionally, there was a boom in the number of restaurants that opened up, creating employment opportunities for locals (McGee).

            Nonetheless, the author also claims that to some extent, raising the minimum wage does in fact lead to loss of jobs, citing research conducted in 2009. The low-skilled workers widely feel this effect according to research and most standard business models. Consequently, labor markets, being the most competitive, operate on a scheme that predicts that a higher minimum wage will ultimately lead to loss of jobs particularly among low-skilled workers (Neumark and Wascher 101). This is primarily because a higher wage has the potential to offset the competitive equilibrium index which is used as a control mechanism by businesses hence affecting employment negatively. To begin with, employers will be inclined to replace low-skilled labor which is expensive with cheaper equipment and capital. In addition, the new wages implies that there is need to inculcate a new input mix which results in higher costs. As such, the exogenous shifts to the left in order to readjust its equilibrium and offset a breakeven point. Eventually, these costs reduce the quantity of products being produced and the labor demand thus falls (Marx and Engels 211; Neumark and Wascher 104). This is in accordance with the law of demand; if prices increase, then demand decreases and vice versa.

            Nonetheless, McGee holds the view that labor markets are by far the most competitive industry segment, but have a disregard for worker mobility. Competition is perfect in the sense that all firms and organizations possess perfect information about the market while being independent. Actions from individual firms do not interfere with operations of others. In some alternative employment models, employee mobility is highly diminished, and as such, employers have supremacy in setting wages for workers (Neumark and Wascher 108). These models rarely have any effect concerning increasing the minimum wage hence are not typical of unskilled workers who are adversely affected by these fees.

            In conclusion, I concur with McGee’s arguments regarding the minimum wage. There is a need to revisit this area in order to come to a common stance on it. Besides, business owners who are in a position to cut back and distribute profits among employees should revise their wages to improve the living standards of their employees. This will increase extrinsic motivation which will in turn translates to growth in productivity (McGee).

Works Cited

Marx, Karl, and Friedrich Engels. Wage-labor and capital. New York: New York Labor News Company, 1902. Print.

McGee, Suzanne. Will raising minimum wage be a curse or blessing? Only one way to find out. The Guardian, April 16, 2015. Web.

Neumark, David, and William L. Wascher. “Minimum wages and employment.” Foundations and Trends in Microeconomics 3.1 (2007): 1-182. Print.