Impacts of Minimum Wage from a Microeconomics Standpoint - Assignment Example

The minimum wage is a prearranged level of wage that has to be reached or surpassed by all kinds of employers in both the private and public sectors. The minimum wage normally relies on the handed effect by legislative act. Such a move ensures its legality and secures its authority and mode of implementation. The lowest wage, however, is reviewed over different ranges of time. Essentially the figures are subject to change but only after a broad consultation within the responsible stakeholders.

Microeconomics, being the learning of fiscal matters from the standpoint of distinct units of the larger economy, analyzes this. These units include separate households, microbusinesses, or persons (Morath). Education, health, infrastructure are all sectors that employ aggressively and so need the minimum wage for the overall peaceful and fair management of remuneration standards. The concept of minimum wage bears innumerable progressive and adverse impacts on industries, kinfolks, and individual employees.

In the business world, it presents far-reaching effects on the management and success of commercial entities. Organizations that employ a big number of employees who tend to be unskilled are normally greatly affected. The reason is that these companies occasionally face tremendous increases in their budget for wage coverage as a result of actualization of the minimum wage. A significant factor is that companies get no capability to negotiate what they feel is commensurate to pay their low cadre employees.

Consequently, industries that employ untrained labor experience significant deterioration in their profit limits (Morath). On the other hand, their operating expenditure surges. A challenge to their inclusive economic growth becomes visible. A new dimension is then introduced to their economic methodology of crafting strategies and policies.