TOPIC: THE IMPACT OF MINIMUM WAGE LEGISLATION ON EARNINGS AND EMPLOYMENT
ABSTACT
This paper will discuss the meaning and impact of minimum wage legislation on earnings and employment. It will give theoretical explanation on how the fixing of minimum wage will affect the workers in the labour market, especially the low wage workers. It will explain how the labour market will react with an increase in the minimum wage legislation.
INTRODUCTION The concept of minimum wage is an age-long economic issue that has been repeated over periods and economic cycles. Minimum wage however has been the subject of economic discourse over the years in different countries even before the international Labour Organization (ILO) was created ( Hyginus
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A subsequent law was enacted by Australia, in 1896 established wage boards on which the workers and employers were represented in equal number, with the power to fix minimum wage enforceable on the employer. In 2004, China issued new regulation on minimum wage to solve the problem of wage inequality. In Brazil and Argentina it has been revitalized to help reverse the decline in wage of low paid workers since the early 2000s (ILO: Global Wage Report 2008/09 Geneva, 2008). In countries without a fixed rhythm of adjustment, for example in Russia, Nigeria, Cambodia and Malaysia, minimum wage increases in arbitrary way according to specific economic, social and political conditions in the country. Fapohonda et al (2012) describe minimum wage not only as the smallest hourly wage that an employee is paid as mandated by federal law but also as a social protection which requires the effort, commitment and collaboration of all stakeholders. This corresponds to ILO Convention 131 of 1970, which stipulates: that minimum wage must minimum sum payable to a worker for work performed or services rendered within a given period, whether calculated on basis of time or output, which may not be reduced either by individual or collective agreement, which is guaranteed by law and which may be fixed in such a way as to cover the minimum need of the worker and his/her family in …show more content…
The minimum wage is set at Wm and if the minimum wage is set at that point, at point A demand for labour drops at E1 and supply of labour (point B) increases to E2.
IMPACT OF MINIMUM WAGE ON EMPLOYMENT As it was stated above the basic competitive model is what is used to set the minimum wage. Therefore using the basic competitive model the effect of minimum wage legislation will be observed (positive or negative effect). The graph below is going to explain in detail; the effects of minimum wage on employment wages D S WM C D
The idea of a minimum wage first emerged in the early 20th century, when reformers and labor groups pushed for legislation that would place a floor on salaries. As part of the Fair Labor Standards Act, the first minimum wage law was enacted in the United States in 1938. Since then, numerous nations have passed minimum wage legislation to safeguard workers against exploitation and poverty. Example #1–Historical (pre-1900)
Definition of Minimum Wage and its Importance “Minimum Wage” refers to the legally mandated lowest
Since the election and reelection of President Barack Obama the increase in minimum wage has been a major topic for the United States. His proposal to increase minimum wage has sparked a lot of controversy with some Americans. Many believing that increasing minimum wage will have a negative impact on our economy and even our educational system. They argue that increasing minimum wages will harm the very people it was intended to help because it will increase housing cost as well as the price of consumer goods. They argue that it will decrease the high school enrollment rates at the same time increase dropout rates.
The Minimum wage was inserted into law to counteract working forty plus hours a week and child labor. In today’s times the only thing minimum wage is doing is hurting young workers to get a job and keeping smaller business from growing. With the minimum wage in place it doesn’t guarantee a living, it guarantees
There are just few things that both people and companies want and that is to make money. Companies want to make a profit to survive and become stronger and grow. Then you have people or employees they just want to make money to provide for their families. The nations minimum wage right now is low and many people struggle to provide for their families, and then the companies they work for are getting richer and so are their leadership, but the employees are still low or at a minimum pay rate. Which side will win, many states and politicians want the higher minimum wage.
Ever since the Great Depression, the minimum wage has been in effect — in order to reduce poverty and solidify that employees are paid a reasonable sum. Although the minimum wage can be beneficial and advantageous for individuals and to our economy as a whole, it can also be detrimental to our nation’s finances. The federal government should not allow this to pass, but rather they should increase the citizens’ knowledge of the pernicious consequences and complications that will arise with a higher minimum wage, especially one as high as $15 per hour. Some of the resulting conflicts that will occur if this possible raise in the federal minimum wage takes effect are: job loss, business failure, higher consumer prices, and a lower demand for uneducated employees. Although it may appear as if increasing the federal minimum wage will help to lift families out of poverty, in
A controversial topic often debated between liberals and conservatives is the minimum wage issue. While many liberals advocate for raising it, a number of conservatives are persistent on keeping the rate constant; however, studies show that raising minimum wage would not alleviate this country’s poverty issue and would, in fact, increase the unemployment. For these reasons, the minimum wage should not be raised. Increasing the minimum wage would cause economic strain in many ways to workers already living in poverty. According to James Sherk’s article: ‘Raising the Minimum Wage Will Not Reduce Poverty’, raising minimum wage to seven dollars and twenty five cents would cause an estimated eight percent of current workers to lose their jobs.
In 1938, the Fair Labor Standards Act (FLSA) was signed into law to establish a standard minimum wage. The law also created a standard in recordkeeping, the use of child labor, and the number of hours an employee may work during a workweek. These standards of the FLSA are enforced by the Wage and Hour Division of the U.S. Department of Labor. As part of the 2007 Fair Minimum Wage Act, the current federal minimum wage for nonexempt employees is $7.25 per hour.
The Minimum Wage Struggle Money is an essential object to acquire in the society we live in. Various places demand a high monthly rate in order to occupy a premise, along with the stress of utility bills that may not be included. Aside from living costs there are many other factors which must be calculated when budgeting on a day to day basis. Overall, the survival rate tends to increase due to so many responsibilities that need to be upheld, as well as costs being raised. This rise in both the cost of living as well as the need for higher wages proves that the standard of minimum wage needs a major increase.
First, the concept of minimum wage was established by the Fair Labor Standards Act (FLSA) in 1938 for the purpose of insuring a minimum standard of livelihood for inexperienced workers. The last time the minimum wage was increased was on July 24, 2009; the wage increased from $6.55 per hour to $7.25 per hour. Minimum wage should be based on a living wage rather than a market wage standard. The minimum wage being based on a market wage standard violates the principles of beneficence, nonmaleficence, justice, and responsibility.
During the Obama administration there has been a call to rise the minimum wage to $15.00 an hour. Those who support the rise claim it is a only “fair” for workers to have a “living wage”. Those who against the rise of the minimum wage say it would have a negative effect on business, small business especially. Business should not mandated to provide to provide a minimum wage based on the governments’ say. In fact I believe the minimum wage should not be raised at all.
In the past three years, many politicians and labor unions have been pushing for an increase in minimum wage. Minimum wage is the lowest set wage by a law of a government body. An increase in minimum will benefit some people, and hurt others. An increase in minimum wage will cause benefit in the short run but will be very damaging to the economy in the long run. There should not be an increase in minimum wage because it is unhealthy to the economy in the long run and it will be the major cause of job loss, increase in inflation, competition, and the price level of goods and services.
Today 's society has various standpoints when looking at this very contentious topic in the US: Minimum wage. To illustrate, imagine coming home every day to your family and not being able to you or your family to have dinner as you didn’t make enough money during work. Imagine having to share a small cramped apartment with a family of 4 to save a few pennies for necessities such as food, water, and medical care. Indeed, these are the conditions these families living on minimum wage are experiencing. You may ask, who doesn’t want the minimum wage to increase; the more, the better right?
1. Introduction In the modest term, a minimum wage is a lawfully authorized minor bound for wages, but the term “lawfully authorised” is unclear, leading too many different kinds of minimum wages institutions (Cunningham et al, 2007:19). It further states that in the most straight forward cases, such as Brazil and Bolivia, the federal government identifies a wage level and all employers in the country must pay at that level or above it (2007:19). Economist have tended to oppose minimum wage on the grounds that they reduce employment , hurting many of those they are supposed to help (the economist:24/11/2012).
Minimum wage was first established in 1938 by Franklin Delano Roosevelt, in an attempt to stimulate economic growth and create a better standard of living for the lower class. This attempt was fairly successful, but also has many consequences. You may be asking yourself, “how on Earth could setting a limit on how little you can pay someone be bad?” On the surface this statement seems logical, but if we delve deeper we begin to see many negative effects on the implementation of minimum wage. In our nation the minimum wage law almost seems out of place, like it doesn’t quite fit in.