• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Should There Be a Minimum Wage?

Extracts from this document...

Introduction

Should There Be A Minimum Wage? The wage rate in an industry is determined by the cross over point of the demand for labour for that industry and the supply of labour for that industry. The diagram below shows that with supply (S) and demand (D), the equilibrium wage rate is OW and the equilibrium number of workers supplied and demanded is ON. Now I will list a few arguments for each side of the argument. For and Against a minimum wage. For The minimum wage is there to elevate the earning of people on low incomes and help to get them out of poverty and back into emplyoment. This is the main and best reason why people support a minimum wage and is the hardest to argue against. There is very little you can do to justify paying someone such a small fee per hour, no matter how basic menial and easy the task may be. ...read more.

Middle

Basically, because people have more money, they spend more money. That in turn leads to increased revenues for small businesses, who then spend more money, which then increases the revenue for other businesses. This is what Economists call 'The Multiplier Effect'. Against Look at your a normal Supply/Demand curve which is used to determine the price for something. In the working market that price is the price of work, i.e. a wage. By increasing price you are raising the supply curve with the result that supply of labour expands, however, demand falls. In real terms this is easy to see. Increasing work costs often mean a lack in the amount of jobs available. This causes many people to believe that a minimum wage actually adds to poverty by pricing people out of jobs and increasing unemployment. The knock-on effect on the economy. ...read more.

Conclusion

Jobs are created when businesses produce goods and services that people want at prices they can afford. The more people in (reasonably payed) employment, the more good and services they can afford to buy, the more jobs created and so on. Also, the more people there are in employment, the less the government will have to pay in unemployment benefits. Another positive point about the minimum wage is that it encourages young people into the workplace. If young people can find a job paying a reasonable wage when they leave school and realise that they will be better off working than on benefits. If they start off by living on benefits they are more likely to stay on benefits and be unable to see the positive side of working. However, with a minimum wage the employers have to charge more for thier good or service to compensate for the raise in employee pay. They would then sell less of their good or service and be less competitive. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Advantages and disadvantages of minimum wage.

    On a macroeconomic level, minimum wages will ensure that spending will increase. When spending increases, aggregate demand increases and creates a Keynesian multiplier effect on the economy. If there is an additional expenditure, the initial increase in expenditure will

  2. An Empirical Investigation into the Causes and Effects of Liquidity in Emerging

    bid and ask prices or as a percentage spread (equations 1 and 2 respectively below). A narrow spread suggests a greater liquidity because the market price of the bond is more accurately reflected and thus easier to sell in the market.

  1. Why does Britain need a Minimum wage

    Some economists say that the Minimum Wage is low and therefore should not have a significant negative impact on the economy.8 Some other economists argue that the effects of Minimum Wage will be felt deeply in certain sectors of the economy such as hospitality and catering which are particularly labour

  2. What justification isthere for the introduction of the National Minimum Wage?

    Therefore, the NMW was justified in bringing British pay in line with that of other comparable nations and protecting part time workers from unfair exploitation in the labour market (and hence also reducing the threat of unfair competition through the use of very low-paid workers).

  1. Living Wage

    On the other hand, the people of developed countries suffer loss of wages due to loss of jobs. Moreover, off-shoring seems to be unstoppable3. The policy of outsourcing is increasingly becoming controversial in the U.S. and Western Europe. The U.S.

  2. Assess the arguments for and against the national minimum wage

    full employment and utilisation of the labour factor is needed. There is truth in the economic principle of parties acting rationally and wishing to maximise their utility. In the labour market this could be applied by using the NMW as an incentive for people to move out of voluntary unemployment

  1. What are the possible impacts of minimum wage legislation in the short-run and in ...

    As seen in Figure 1 below, the point E at quantity Q1 and wage rate W1 indicates the equilibrium point. This is where the labour market is said to clear (at the equilibrium wage rate). However, having minimum wage legislation imposes a price floor or a price ceiling into the

  2. Discuss the arguments for and against the UK economy being a low wage economy ...

    they can only produce up to a point and then the law of diminishing returns will set in, and this will result in the business not maximising its profits so the business has to grow. High wages should in theory result in full employment of the work force, this in turn brings about some big affects for the government.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work