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04.02 Should the Government Control the Economy?

Economics 1 Honors

Jessica Relyea

on 7 May 2013

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Transcript of 04.02 Should the Government Control the Economy?

The Government Should
Raise Minimum Wage! Jessica Relyea
Economics Honors
04.02 Should the Government Control the Economy? Compensation Leave it Up to the Employers! Unfairness With the current recession of the United States, and the subsequent economic status of many of its citizens, many believe raising the minimum wage is the solution, improving the quality of life. They, of course, are wrong. In fact, rather than improving conditions, the action would only prevent full employment, and hinder economic growth. Small business owners struggle today, and when businesses have allocated a certain amount of money for overhead, and overhead costs increase, the businesses will only suffer further, especially when considering the fact that a rise in wage will not increase productivity or profitability. Not only will raising minimum wage increase payroll costs, but so will the increase in all others’ wages as well. Take the following example: if Employee 1 makes minimum wage at $7.67, while Employee 2 makes $9.25 because he has a higher skill lever, then the wage of Employee 2 must be increased as well, being more valuable to the company, and not showing favoritism. The increase in payroll forces business owners to compensate. The options include: 1) Cutting the business owner’s own pay, 2) Firing some employees, or 3) Limiting the hours of some employees so their take-home pay is the same as when the wage was lower. Thus, some employees end up losing their jobs, or almost as bad, having their hours cut. Meanwhile, business profit is less, going against the spirit of entrepreneurship. Too much government regulation proves to have more consequences than benefits. In the United States’ current economic state, the free market can handle the issues of unemployment and poverty than government interference. Ultimately, the minimum wage should be left between the employer and the employee. Business owners should pay people what they think they’re worth, it’s their own business, their own money, and if employees do not think the conditions are fair, they have the option of seeking employment elsewhere. Bibliography "Raising Minimum Wage: A Bad Idea for a Multitude of Reasons » Columns » Bluefield Daily Telegraph, Bluefield, WV." Columns ATOM. N.p., n.d. Web. 06 May 2013. Johnston, Dr. Patrick. “Raising the Minimum Wage is Bad for the Poor and for Business Owners – Vote Down Issue 2 on Nov. 7 | Right Remedy.” Right Remedy | A ministry doctor Patrick Johnson and family. N.p., n.d. Web. 6 May. 2013. <http://rightremedy.org/articles/181> Surplus Shortage Raising Minimum Wage Above Equilibrium Employees Minimum Wage
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