The effects of raising the minimum wage - Essay Example

The minimum wage increases compress the wages distribution. Firms respond to these higher labor costs by reducing employment, reducing profits, or raising prices.[1] European Employment and Industrial Relations Glossaries. European Foundation for the Improvement of Living and Working Conditions [2] History of the National Minimum Wage. Employment Matters. United Kingdom Department of Trade and Industry Raising the minimum wages increases the cost of government social programs due to assistance programs aiding the laid-off workers.

Some also argue that higher minimum wages reduce teenage education levels and decrease workers' long-term earnings. They contradict the benefits of raising the minimum wages and argue that the minimum wage does not reduce poverty and also slows economic growth of the country. Minimum wage increases lead to widespread unemployment, and such an intuitive argument, that society would have to be a pretty bizarre place not to abandon the wrongheaded policy altogether. For those low-wage earners who are members of poor families, will experience severe effects that an increase in the minimum wage will have.

Increase in minimum wages will reduces demand for workers through a reduction in the number of jobs. Also it will affect the profit margins of business owners employing minimum wage workers. By raising unemployment and eliminating entry-level jobs, minimum wage hikes also eliminate opportunities for workers to gain valuable experience and skills that prepare them for. The minimum wage has become a hot topic. The arguments for and against a higher minimum wage boil down to whether the Country’s economy should follow a low-road/low-wage or high- road/high-wage growth path.

A low-road strategy involves developing an economy based on mass production, with large numbers of workers hired for low-skill jobs at low wages. A high-road strategy involves developing an information-based economy, which would require a flexible workforce with a high level of skills; such workers would, of course, command higher wages. Legislating an increase in the minimum wage would contribute to accomplishing this task. From the social conscious movement, which has been sweeping the newer generations, it is viewed that a higher minimum wage is needed to keep the lower classes living at a comfortable level.

Raising the minimum wage is not simply a magic tool to increasing the condition of living for the lower classes in a country; it actually works against that as it brings down the condition of living even further for those who become unemployed. The free market is a beautiful thing, which balances itself out and rewards each participant with that which they input.