How Minimal Wage Affects Macroeconomy Mathematics & Economics Essay (Essay Sample)

The Impact of Minimum Wage on Macroeconomic Factors
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The Impact of Minimum Wage on Macroeconomic Factors
The recent adjustments to the minimum wage in the United States to make up for the erosion resulting from inflation have stirred a lot of controversy about the quantitative effects of minimum wage on certain macroeconomic factors such as employment and inflation. The minimum wage addresses the needs of the low-income earners by creating a wage floor below which no covered worker can be paid. However, higher wages impact the society in two different ways. Firstly, a higher minimum wage can stimulate consumer spending and improve economic growth. Secondly, a higher minimum wage can increase the costs of production for industries and eventually cause inflation. However, there are a number of factors affecting the level of inflation and economic growth other than minimum wage. In the real world, many nations have experienced minimal impact on the levels of inflation and economic growth, although they have had above-inflation increases in the minimum wage.