Dispute over Minimun Wage - 1281 Words

Introduction Suppose a person classified as an adult working in a fulltime occupation, cannot afford to eat, afford to find a place to reside and can barely clothe themselves. Then I suppose the government of our age has broken their social contract. Minimum wage is a disputatious issue because it is contested in an array and discriminatory audience. Minimum wage I believe is the epicenter of the economist’s sphere of interest as he in constantly in hot pursuit in finding its relationship with job loss. President Bill Clinton’s administration proposed in 1993 that it had intentions to have an increase in the minimum wage in America. The liberals applauded the step in good faith whilst their conservative counterparts expressed grief emotion†¦show more content†¦In this regard the employers would want to adjust their new business ventures so that employers are worth at least as much as the new minimum wage rate. This notion holds that these changes would cut low-skilled employees and replace them with mechanized skilled employment, hence many believe the minimum wage leads to unemployment. (Card and Kruger 55-57, 1995). Another more recent model is that of the monopsony. The tenets of this economic model is that the firm operates with continuous vacancies. Each firm would want to employ more employees at the current (initial) wage rate, however they find it is not worth it to give a higher wage because the firm would be forced to increase the wages of all their existing employees as well. The existing employees would not be happy if new employees earn a higher wage rate than their initial wage rate. In this predicament, small adjustments (increases) in the minimum wage will lead employers to increase employment due to that higher minimum wages enables previously low average firms in the same industries to fill vacancies quickly. If however the minimum wage is raised to many firms, they will opt to reduce employment which agrees with the conventional model (Card and Krueger, 102-110,