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Here's what happens when the minimum wage is increased: It Depends.
For some industries/occupations that have few if any min wage employees: no effect.
For industries that have a significant number of min wage workers, the cost per unit of Labor will increase but total labor cost could go up, down, or stay the same, largely dependent on changes in productivity.
The number of employed could go up, down, or stay the same depending on demographics, industry demand, and labor supply.
If the increase is still below equilibrium, then there will be no effect.
If the increase is significantly above equilibrium, then there will be a surplus of labor (unemployment), if the demand and supply curves don't change. But they might.
If one area increases and an adjacent area does not, then we could see an increase in employment with the increased wage.
And that's all off the top of my head. There could be secondary effects if those who were making barely above minimum wage also receive a pay bump. And with enough variations among occupations, industries, demographics, supply, demand, etc, we could see all the above effects at one level or another.
In short.....Anyone who tells you what will happen for sure with a change in the minimum wage is talking out of his or her posterior. There are too many variables and no way to predict except in the broadest terms, and even that will be with a large degree of uncertainty.
I agree in general. Part of what I was trying to say, though was that that won't always be true and there will, with certainty, be cases where raising the minimum wage will have a detrimental effect. The question is to what degree and are the overall benefits worth the detrimental cases. Passing off the cost to the consumer can decrease demand, which in turn could decrease the demand for labor.But the thing to keep in mind, is labor is a demand function. Yes there will be some elasticity, but as long as the wages are in the low range of elasticity the effects on employment will be minimal (IMO).
- If there's demand, corps will hire employees and pass on the cost if necessary.
- If there's no demand, corps won't hire needed employees.
That's my take on this, and what seems to be occurring in the areas of raised minimum wages.
Too many unexpected consequences for liberal pinheads in the government to figure out
Why not let the free market decide how much to pay?
Because the pure competition model of labor supply and demand assumes the following:
- All jobs are equal and can be filled by anyone.
- All employers and employees have perfect knowledge of wages and opportunities.
- There are no barriers to entry or exit from employment, or to relocation
- The sole consideration for supplying labor is price and a worker can decide not to work if the price is not high enough.
I think we can all agree that none of those assumptions apply in the real world. So there are inefficiencies that adversely affect primarily unskilled workers. Now some countries, such as Sweden, have not official minimum wage, but wages are not determined purely by the free market, but by collective bargaining agreements by labor unions.
No it doesn't
Where did you hear that?
A doctor cannot be replaced by a plumber
And in most cases a plumber cannot be replaced by a doctor
I said it was an assumption of the pure completion model. Which it is. I specifically said it does NOT apply to the real world.
A basic intro to economics model, like that of pure competition, bears as much resemblance to the real world workings as does a model of a skeleton to a living human.
Here's what happens when the minimum wage is increased: It Depends.
For some industries/occupations that have few if any min wage employees: no effect.
For industries that have a significant number of min wage workers, the cost per unit of Labor will increase but total labor cost could go up, down, or stay the same, largely dependent on changes in productivity.
The number of employed could go up, down, or stay the same depending on demographics, industry demand, and labor supply.
If the increase is still below equilibrium, then there will be no effect.
If the increase is significantly above equilibrium, then there will be a surplus of labor (unemployment), if the demand and supply curves don't change. But they might.
If one area increases and an adjacent area does not, then we could see an increase in employment with the increased wage.
And that's all off the top of my head. There could be secondary effects if those who were making barely above minimum wage also receive a pay bump. And with enough variations among occupations, industries, demographics, supply, demand, etc, we could see all the above effects at one level or another.
In short.....Anyone who tells you what will happen for sure with a change in the minimum wage is talking out of his or her posterior. There are too many variables and no way to predict except in the broadest terms, and even that will be with a large degree of uncertainty.
I understand, and I agree.I agree in general. Part of what I was trying to say, though was that that won't always be true and there will, with certainty, be cases where raising the minimum wage will have a detrimental effect. The question is to what degree and are the overall benefits worth the detrimental cases. Passing off the cost to the consumer can decrease demand, which in turn could decrease the demand for labor.
The problem is that your comment went nowhere
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