Minimum or living wage on unemployment - Essay Example

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The laws on minimum wage prevent employers from different companies from paying wages below the set level. When the government imposes a high minimum wage, employers are forced to change some of their…
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Minimum or living wage on unemployment
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Download file to see previous pages Consequently, minimum wages stifle job vacancies for the minorities, low-skill workers, and the youth. In view of this, the essay classically analyses the impact of a minimum or living wage on unemployment.
Minimum wage policies originated from Fair Labour Standard Act (FLSA) which was signed by President Franklin Roosevelt in 1938(Waltman 2004, p.141). During that period, the act covered specific areas in production industry, which include transportation, mining, and manufacturing industries. However, as time went by, other sectors of the economy were added such as public schools, laundries, and construction industry. Currently, the act covers over 85 percent of the labour force. Thus, the state requires employers to comply with the minimum wages set by the state. Minimum wage policies affect the overall economy. Employers are forced to change their living standards to ensure that they accommodate the increase in the minimum wage.
Although the government has set a specific level of minimum wage payment, there is only a specific group that is affected by the law. Most employees who get the minimum wage are part-time workers, young workers, and people from poor families. Companies employ people are highly skilled and can perform different tasks at the same time. As a result, some of the workers have lost employment as a result of specialization or lacking the skills that are required in a company. Most employers employ the experienced workers living out the young people who are inexperienced. Thus, most young people are unemployed who paid minimum wages in their areas of work (Waltman 2008, p. 152).
A research done by the Bureau of Labour Statistics shows that, 1.8 million employees are paid minimum wages. 49 percent of 1.8 million are the young adult aged 24 and under. 51 percent, or about 1.8 million people are over 25 years old (Rutkowski&Scarpetta 2005, p. 2009). They consist of ...Download file to see next pagesRead More
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