Minimum Wage Essay

American histrions exit have a 1.75$ augment in their periodic lock by the end of 2015, as President Barack Obama late called to raise the federal minimal wage from $7.25 an hour $9.00 an hour. This increase in the negligible wage of American citizen aims to help people with a scummy annual wage cooks, employees of the janitorial industry and many a(prenominal) others working these necessary subaltern occupations argon set to benefit. The white house estimates that this measure ordain salary increase the wage of approximately 15 millions low-income players.Raising the stripped-down wage, according to the gabardine House press, will have some positive effect for low-income families however, many companies are opposed to raising the minimum wage. A high wage will have a direct impact on the live of business. Some economists argue that higher minimum wage will upshot in an increased unemployment percentage.Although minimum wage laws can fix hourly pay, they cannot gua rantee jobs. Employers are not willing to pay a worker more than the value of the additional product that he produces. For example, if a worker produces 4$ worth of goods per hour and because of the minimum wage he has to be paid 5.15$. Since he cost more than what he produces it makes it hard for him to reclaim a job.At one point in the article, the President utter that one of the best ways to get the economy going once again is to put money in the pockets of people who work. (Lowrey)It is true that families with low income will earn more money it is projected that a family that is earning $20,000 to $30,000 a course of study will see an additional $3,500 in their income. (Lowrey) This general positive number of increasing the minimum wage has led many law makers to wrongly assume that increasing the minimum wage is an effective way to fight backpoverty.From the point of view of an economist, raising the minimum wage may increases the prospect that a poor family will es cape poverty through higher wages, simply it does increase the probability of another family with average income will give way poor as a result of minimum wage broad rise to inflation. It also decreases the proportion of families with income near the poverty line, suggesting that it more will be more difficult to escape poverty. We all know that if the minimum wage increases then the cost of living will inevitably increase as well as a result of inflation.Economists are against minimum wage laws because they create a damage floor. In this mooring, a price floor is not the price that products can be sold for, but what price employers can spend on their employees. For non-economists, legislating a minimum wage is commonly seen as an effective way of giving raises to low-wage workers. unluckily it, like any other price floor, creates a free. In this case, the surplus is a larger than expected number of workers more of are willing to work in minimum-wage jobs than there are emplo yers willing to hire at that wage.Economists think that there should not be any policies concerning wages an employee should be paid what the employer thinks he/she deserves. nominal wage increases make unskilful workers more expensive and therefore undesirable relative to all other factors of production. (Mankiw) For example, if expert workers make 15$/hour and unskilled workers make three dollars an hour, skilled workers are five time as expensive as the unskilled. idealistic a minimum wage of five dollars an hour makes skilled workers relatively more attractive by making them only three times as expensive as unskilled workers.Another important diagnostic of the policy to increase minimum wage that was not discussing in the article is that it may also negatively impact workers by changing how they are compensated. Benefits such as paid vacation, free room and board flashy insurance and subsidized childcare are an important part of the integral compensation for many low wage workers. (Mankiw) When minimum wages rise, employers can adjudge total compensation costs by cutting benefits such is the case for the United States today.The employer always had to follow the minimum wage in tell apart to pay their employee. The minimum wage should not be existent present tense the employer should have the choice to pay their employee based on their knowledge. An employee that knows more and produces more should have an higher hourly range.SourcesTextbookMankiw, N. Gregory. Principles of Economics. 6th. Mason, OH, USA 2012. Print.WebsiteLowrey, Annie. Raising Minimum Wage Would Ease Income Gap but Carries Political Risks. New York Times. N.p., 13-02-2013. Web. 5 Oct 2013. .