Impact of MW on Unskilled Workers' Employment Level (Article Sample)
its about free market aproachsource..
FREE MARKET ECONOMY
FREE MARKET ECONOMY
Impact of MW on Unskilled Workers' Employment Level
Policymakers normally suggest the use of Minimum Wages (MW) as a way of increase in employees' income and to reduce poverty level (Schmitt, 2013). However, different researchers show that there are substantial negative impacts of this policy on employment. Since young unskilled adults are the most significant group that benefit from MW policy, legislators must comprehend how it affects their job before implementing it. Such a law comes at a price to others. Imposition of the MW raises the hourly salary of these individuals.
Nevertheless, managers respond to the increased labor cost for the unqualified workers by decreasing their working hours or reducing the workforce. For this reason, youths search for jobs that pay highly hence creating a gap between the jobs available and the number occupation desired. This gap, in turn, results to unemployment. These jobless persons burden their families financially (Ruan, 2017).
Again, the late entry in the workplace decreases their lifetime incomes. Managers may minimize or eliminate training chances which they had funded earlier on through reduced training funds resulting in decreased long-run salary. The standard economic theory postulate that MW imposition raises joblessness and reduces employment level. The same model argues that labor market for unqualified young adults assumes that there is a competitive market such that neither the manager nor the worker can determine the market wage (Neumark et al., 2014).
Conversely, given that the market for these employees is monopsonistic, indicating that the organization has market power and hence can affect the income. As a result, adding the MW would, therefore, increase the youth's jobs. Therefore, MW may not be the solution to improving employment market situations of unqualified workers.
Impact of MW on Skilled Workers' Employment Level
An occupation that requires an enhanced knowledge regarding a particular skill or trade falls into the category of qualified labor. Skilled labor may vary from one location to another although it applies to only employees who have long-term formal training (Neumark et al., 2014). MW for such a laborer varies based on the staff exemption or non-exemption which focuses on the duties and not the titles. Managers monitor their workers based on the task they perform to determine if they are qualified to deserve MW.
The policy may fail to affect workers with varied skills although those with higher qualification may substitute those with lesser competencies. Neumark et al. (2014) argued that increase in MW may encourage automation in firms that require skilled personnel thus raising their demand. Consequently, it leads to the increased employment level of such individuals.
Impact of MW on Poverty Rate
Poverty remains to be a challenge in many households globally. There are higher instances of poorer health, food insecurity and lack of adequate education (Ruan, 2017). These problems are as a result of poverty. Policymakers try to dive in to mitigate this issue through the imposition of MW. Increased MW raises the wages which allow th
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