discuss the short term and long term effects of minimum wage?essay
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Wage is compensation in the form of financial payments made to employees for the exchange of their time and labor. It is given as salary for the amount of work done by employees or in return for their services. The wage rate is determined by the market forces as it is considered a perfectly competitive market. In a perfect competitive market, the assumption is that there are many firms which offer identical jobs to workers with the same set skills. The demand and supply of labor forces will set the equilibrium for the wage in the market which is at We . Firms are wage takers as workers will choose the wage offered to work.
Minimum wage is defined as the lowest hourly, daily or monthly salary that employers may legally pay to workers. Minimum wage is the lowest amount where workers may sell their services which in term are known as the market floor for wage. Before minimum wage was proposed and enforced, employers would take advantage of women and young workers by underpaying them. Now employees are protected under the law to receive a certain lowest amount for their labor in low payment jobs.