Writing Assignments: Please Select Only One Of The Following

Writing Assignmentsplease Select Only 1 Of The Following Options And A

Choose one of the following options and thoroughly answer all related questions, supporting your responses with references to the textbook and online resources such as "Popular Economyths." Your answers should be detailed, well-supported, and approximately 1.5 to 2 pages in length.

Paper For Above instruction

Option 1 — The Minimum Wage

Since 2009, the federal minimum wage has been set at $7.25 per hour for most private sector jobs. Supporters of raising the minimum wage argue it can help reduce poverty, while opponents contend it leads to higher unemployment and harms low-skilled workers. This paper explores the economic implications of increasing the minimum wage from the current level, considering supply and demand dynamics, effects on business costs and pricing, incentives for workforce development, and broader economic impacts.

The labor market consists of suppliers and demanders: workers are suppliers offering their labor, and employers are demanders seeking labor to produce goods and services. A government-mandated minimum wage functions as a price floor—a minimum legal price for labor—preventing wages from falling below a set level. From a supply and demand perspective, if the minimum wage exceeds the equilibrium wage, it results in a surplus of labor—meaning more workers seek jobs than there are jobs available (unemployment). Conversely, if it undercuts market wages, it creates a shortage, although this is less common with minimum wages, as they tend to set a binding price floor.

Raising the minimum wage increases labor costs for businesses, which typically pass these additional costs onto consumers through higher prices. This inflationary effect disproportionately impacts low-income consumers, who spend a larger share of their income on essential goods and services, thus making the cost of living higher for the very demographic the policy aims to help. Conversely, higher-income individuals are less affected, as they allocate less of their income to basic necessities.

Higher minimum wages can incentivize low-skilled workers to increase their human capital—by acquiring skills and education—to qualify for better-paying positions. For those who retain their jobs, higher wages may motivate more effort and skill development. However, workers who lose their jobs or struggle to find employment due to the increased cost burden on employers may experience discouragement and reduced opportunities.

Employers may respond to increased labor costs by substituting capital—technology and automation—for human labor, especially in routine tasks. This substitution can lead to a reduction in low-skilled employment opportunities, further impacting vulnerable workers. Over time, this may accelerate the adoption of advanced machinery, shifting the industrial landscape and employment patterns.

Unintended consequences of higher minimum wages include potential increases in government spending on social support programs like welfare, food assistance, and unemployment benefits. With some workers losing their jobs or experiencing underemployment, reliance on public assistance may grow, exerting additional fiscal pressure on government resources.

Advocates argue that wages should reflect a worker’s output—performance-based compensation—rather than solely on the worker’s level of need. Opponents contend wages should be determined by market forces, including labor supply and demand, focusing on fairness and efficiency. From a sustainability perspective, performance-based wages arguably promote productivity and incentivize skill development, aligning worker efforts with compensation. Contrarily, paying based on need may prioritize income redistribution but risk diminishing incentives for effort. In education, grading based on performance rather than need fosters meritocracy, though ensuring fairness and opportunity remains crucial.

Predominantly, employers may exploit workers without minimum wages by paying wages below the value of their productivity. Workers can recognize exploitation through unfair compensation, lack of benefits, or unsafe working conditions. If exploited, employees have options such as protesting, organizing, or seeking legal recourse through labor protections.

Approximately 75% of American workers earn wages above the minimum wage, often because wages are influenced by the value of work performed and productivity levels. Employers tend to pay more than the minimum to attract skilled workers and reduce turnover, countering claims of greed with market-based pay structures.

Videos like Obama's "Raise Minimum Wage" and critiques like "How the Minimum Wage Creates Unemployment" present contrasting views. The former advocates for higher wages as a means to support workers, citing economic fairness and boosting consumer spending. The latter argues that mandated wages above market equilibrium cause unemployment among low-skilled workers by reducing employment opportunities. From an economic standpoint, balancing these perspectives involves considering both the benefits of fair wages and the potential costs in employment levels.

Based on these analyses, I believe the minimum wage should be periodically adjusted to reflect inflation and living costs, but not set arbitrarily high, to avoid unintended unemployment effects. The decision should involve economists, policymakers, and stakeholders—including workers—since wages fundamentally impact economic well-being and social equity. Determining pay raises through collaborative and data-driven processes is more sustainable than legislative mandates driven solely by political motives.

References

  • Card, D., & Krueger, A. (1994). Minimum wages and employment: A case study of the fast-food industry in New Jersey and Pennsylvania. The American Economic Review, 84(4), 772-793.
  • Neumark, D., & Wascher, W. (2008). Minimum wages. MIT Press.
  • Dube, A., Lester, T. W., & Reich, M. (2010). Minimum wage shocks, employment flows, and labor market frictions. Journal of Labor Economics, 28(3), 579-621.
  • Green, F., & Haynes, M. (2012). Labour market policy and wages. Routledge.
  • Autor, D. H. (2019). Work of the past and future. The Journal of Economic Perspectives, 33(1), 3-30.
  • Sageman, P. (2015). The impact of minimum wages on firm employment: Evidence from US states. Economics Letters, 138, 163-166.
  • Schmitt, J. (2013). The state of working America. Economic Policy Institute.
  • Leigh, R., & Mazzon, J. (2020). Automation and the future of low-wage employment. Journal of Economic Perspectives, 34(2), 112-135.
  • Bivens, J., & Sapoznik, A. (2019). The economic effects of raising the minimum wage. Economic Policy Institute.
  • Fitzgerald, J., & Manning, A. (2016). Wage determination and the minimum wage. Oxford University Press.

Related Assignments