The employment effects of the minimum wage - Term Paper Example

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Author’s Name: Due Date: The Employment Effects of the Minimum Wage Introduction The 21st century earnings inequality often characterized by the ever widening gap in income between the haves and the have-nots has been a hot topic for scholars over the past decade…
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The employment effects of the minimum wage
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Download file to see previous pages Beneath the antagonistic claims on both sides bordering on sound political and philosophical principles are assumptions loosely hinged on individual interpretations of the time series of increasing inequalities. Indeed, there are no doubts that the magnitude of the inequality gap widened further over the past decade alone. Nonetheless, questions abound as to whether the statutory minimum wage settings do have any profound effect on the same. This short paper endeavors to highlight the controversy of the current debate and subsequently ascertain with facts the effects of the Minimum Wage on employment. Supportive Evidence: Decent Pay and the Job Loses The employment effect of the minimum wage is by far one of the topics in economics mostly researched and deliberated upon with an effectual outcome of scholarly arguments and counterarguments that boarder more on the authenticity of data used. A statutory minimum wage, by definition, refers to a legal binding remuneration threshold at which employers may buy labor services from prospective workers or workers may sell their labor services to prospective employers (O'Sullivan and Sheffin 130). Although such laws are effective in many jurisdictions, scholars offer varied opinions on the theoretical models that have stood the tests of time, though challenged by a myriad of data collections that continues to this day. Legally sanctioned statutory minimum wage at predetermined levels bears a strong social appeal in manipulating market labor prices to ameliorate the social income iniquity for the vulnerable members of the workforce, particularly the unskilled workers. For many, a fair distribution of the national cake can only be achieved by some political manipulation of the wage structure; a policy argument judged against the sticky poverty statistics (Eatwell, Milgate and Newman 476). Indeed, given that proliferation of industrial working environments where employers pay little attention to workers’ wellbeing, the establishment of minimum wage legislation is well in order. Entrepreneurial ventures such as the multinational corporations operating in the developing countries have long been blamed for unfair bargaining power over their workers. Clearly, the institutionalization of minimum wage laws in such countries goes a long way in ensuring that workers get at least some decent pay commensurate to the labor services they offer. Even though the above objective is widely popular with the public as a morally justifiable political course, for economists, statutory minimum wage legislations represent a challenge of price distortion within the labor markets, yet with questionable attainment of the intent stated above. From inception, minimum wage laws have received less support from economists than from the enthusiastic public poor/lower cadre workers/unskilled workers who gullibly feel they stand to benefit over their employers. Despite decades of economic research augmented by scientific principles, the employment effect of minimum wage legislation remains a contentious policy. A classic exposition of the minimum wage's inability to substantially reduce the income inequality gap by ...Download file to see next pagesRead More
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