Minimum wage is generally revised to help adjust for the inflating prices, in a microeconomic prospective, it can affect businesses, individual workers and families, both in positive and negative ways (Ingram, n.d.). In the UK, the minimum wage can also help the government in numerous ways, Giles (2014) quoted that it can help “the government in improving social justice and making savings for the exchequer in welfare payments”.
Having minimum wages limits the ability for firms to negotiate wages, particularly for their lowest-level employees. Businesses that employ unskilled labour will suffer as their profit margins will diminish and their expenses increasing which can have an effect on their economic decision-making and economic growth. Firms see minimum wage as a large expense and therefore are generally stricter when employing workers. For every 10% increase in minimum wage, there is a 5% to 9% decrease in youth employment (Ingram, n.d.). This causes individuals to unable to find a job despite accepting the minimum wage payment. As a result of this, local unemployment can rise and can increase crime rates and homelessness should the trend continue (Ingram, n.d.). Minimum wage particularly affects the young teenagers, reducing employment, since teenagers are generally less productive than adults due to them having less experience and education (Frank, 2008).
There are benefits that employees experience from the minimum wage; unskilled workers are guaranteed a boost in discretionary income from this. Not only unskilled workers benefit from the minimum wage but also experienced and highly skilled workers benefit from this since an increase in the lowest wage also increases all other wages (Ingram, n.d.).
Overall, minimum wag...
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...because union contracts have upgrades to current union pay levels if the minimum wage does manage to increase. Unfortunately as of now, there is currently little database available of union contracts to support this (Worstall, 2015). Unions continue to support the minimum wage simply because it enriches them due to the minimum wage making unskilled workers more expensive, therefore making skilled and high paid union members a more attractive choice (Sherk, 2007). Minimum wages restrict the competition for jobs they excel at and it is a stealthy approach for unions to protect their own interests hence why unions are so interested in raising the minimum wage. Even though it seems natural to help those who have nothing, when looked into further, the minimum wage actually has opposite effects and can cause unintended consequences simply due to ignorance (Sorrento, 2013).
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