Why the Minimum Wage Hurts and Causes Unemployment?
Posted On April 25, 2020
Supporters of a minimum Wage incorrectly believe it will help minorities and teenagers. This post is a summary of the minimum wage and the increasing actually hurts employees concerning unemployment.On the Surface level increasing the minimum wage raises the cost of labor and makes it more costly for companies to hire employees. At first glance increasing the minimum wage is extremely appealing to the average person and to politicians. It will put more cash in a laborer’s pockets, they say. Upon analysis but the proposal seems Beneficial’s reverse.The fundamental principles of economics are on the job as one of our economics professors said. Because it is technical jargon, this idea is as armchair economics. When the minimum wage is increased, employers look for workers with more skills which are more effective to offset the higher cost of the labor.
Hence, they hire employees that are less. You see a minimum wage law is an example of a price floor. With regard to economics, it generates a surplus of laborers and an immediate lack of jobs. Employers if the minimum wage is raised high enough, may even go so far as to outsource their labor to foreign countries, hire illegal immigrants or cover their workers under the table. As the groups we can think of that would benefit from a rising of the minimum wage are workers and immigrants in foreign countries.Another they gain although is politicians. They and their various voters and fans seem to believe they are on some moral high ground, always saying that they wish to help teenagers and minorities. People respond to incentives. Raising the minimum wage gives the incentive to discount pursuing an education to people. In doing this, young men and women set themselves up to ‘live’ in the long term.
And no, minimum wage hikes do not decrease poverty. Sure, previously poor households who experience a pay raise may escape poverty but formerly non-poor households will eventually fall below the poverty line in line with the aforementioned incentive effect thus a minimum wage increase hurts everybody in society in the long term. Allow the government subsidizes education internships, housing or mealsand invite low-skilled employees to become educated so that they can attain higher paying jobs. This would also effectively reduce the amount of low-skilled employees and increase the amount of accessible Salário Mínimo jobs thus helping teenagers and minorities more.If you arean employee, present your employer with this idea; if they or they agree, your rate of pay may increase. Otherwise, however, do whatever you can to maintain the concept under wraps as you will most likely notice a reduction in pay or get fired when they or they recognizes the extremely fallible system.