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Minimum wages and unemployment level - Essay Example

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Minimum wage has been characterised to have both supporters and those against it. The benefits that the supporters claim is the minimum wage comes along with improving the…
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Minimum wages and unemployment level
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Minimum wages and unemployment level

Download file to see previous pages... in the amount of minimum wage brings about reduction in the employment levels evidently seen with employment elasticity ranging from -0.1 to -0.2 amongst the teenagers and from -0.15 to -0.2 for the youths (Charles, 2002, p 89).
Employers in a firm are bounded with the minimum wage law which is meant to prevent the employers from paying their employees rate below the minimum wage. This law is widely used in the present day countries. In UK and the USA, this law was only applicable to the women and the children. The extended use of the law was influenced by the period of the great depression. If the objective of the minimum wage was to ensure that employed achieved a worthy standard of living, then some provisions had to be made for those who are retrenched (Flinn, 2010, p58-62).
During the imposition of the minimum wage by the responsible bodies, firms within that jurisdiction would not be permitted to pay less than what the responsible body mandates, for any service that they have received. For instance, this is when the governing body passes legislation that is meant to raise the wage bill from its initial of $6.72 per hour to $8.0 per hour. In line with the above minimum wages, at $8.0, supply of the labour service was 70,000 hours, but only 50,000 hours was what was in demand by the firms. Within a market with voluntary trade, the decisions of firms to hire its employees cannot be influenced with an external body, reason being the quantity of labour needed is normally established through the desire of the firm to buy but not the desire of the workers to sell (Joshua, 1999, p 123).
Through the above discussion there is an assumption that, increasing the amount of minimum wage in a country, the number of employed individual would increase. In addition, there is an emerging possibility that everyone would be able to get a job. However, the number of hours that they initially worked would be reduced. Putting this case into consideration, there would be rise in ...Download file to see next pagesRead More
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