Example Of Essay On My Position Statement About The Economic Problems

- Position Statement Topic: Eliminating the minimum wage
- Minimum wages should be abolished
- Economic arguments against my position:
- Setting minimum wages that are relatively higher that the unemployment support income would force the unemployed (especially those who are inexperienced and without skills) will be forced to not only gain both skills and experience, but also find employment.
- This takes the burden of unemployment support off the taxpayers and boosts efficiency in the economy (Novak 1).
- Minimum wages protect vulnerable laborers from exploitation by firms, especially since low-skilled and inexperienced employees have low bargaining power, lack market information and are uncompetitive in the market
- Minimum wages assist in the redistribution of income in the economy, which in turn achieves better income and wealth equality and reduces class struggle
- Imposition of minimum wages may increase the labor costs, but higher costs serve as an incentive for firms to explore ways to bolsters labor and capital efficiency, which ultimately boosts efficiency in the economy.
- There is inconclusive empirical evidence regarding whether minimum wages lead to reduced capacity to hire more labor and thus this theoretical modeling results ignore the dynamic nature of decision-making in the labor market.
- Economic arguments supporting my position:
- Since it is illegal to employ people for less than the minimum wages, and since employer can only higher when the marginal product of labor is greater than the minimum wage, then it means that employees that have no skills and experience to produce value that is greater than the minimum wages will be forced onto the dole line
- Minimum wages reduce the capacity of employers to hire and thus increase unemployment.
- Increasing minimum wages increases production/labor costs borne by firms, which may respond by cutting overall wages, long working hours, bonuses, human capital development programs (on-the-job training and education), selective hiring and reduction of employment for skilled labor.
- Abolition of minimum wages would force low-skilled and inexperienced to try to build their human capital base (acquire economically beneficial skills and aptitudes) including by getting education, work experience, and other skills, which will ultimately give them better paying jobs and incomes than minimum wages can guarantee.
- With the exception of monopolistic, oligopolistic and monopsonic market structures, interaction of market forces is better suited to determine the applicable minimum wage, which is more efficient than what is set by the government.
- The government should invest its resources in ensuring market competition and balanced power between employers and laborers (e.g. by support labor unions and arbitration), which ensure that firms compete for labor and offer competitive wages instead of setting arbitrary minimum wage rates.
- Minimum wages hardly give workers a decent living, but provide a false sense of security that ultimately consigns them into a poverty trap.
- The ultimate measure of any public policy’s suitability rests in its ability to increase welfare gains in the economy, both for the target population, as well as the rest of the economy. According to (Colin, Gelbach and Miller (2006), the effect of minimum wages on an economy is dependent upon the market structure, and numerous other factors that are beyond the control of the government. Arbitrary efforts by the government to minimize income and wealth inequalities protect vulnerable employees and ensure decent living standards are counterproductive, because they may lead to higher unemployment and human capital investments. In addition, market forces can lead to a more efficient minimum wages and thus the government’s efforts should be concentrated towards preventing market failure. Even most importantly, is the fact that the abolition of minimum wages can trigger increased human capital improvements. It forces low-skilled and inexperienced employees to seek beneficial skills and aptitudes in order to access better employment and jobs, which in turn increases efficiency in the economy. On balance, there are more gains for an economy without minimum wage regulations.
- Works Cited
Colin, Cameron, Jonah Gelbach and Douglas Miller. Robust Inference with Multi-Way Clustering. Washington, DC: NBER technical working paper no.327, 2006.
Dube, Arindrajit, William Lester and Michael Reich. "Minimum Wage Effects Across State Borders." Estimates Using Contiguous Counties.” IRLE Working Paper No. 157-07 (2010): http://irle.berkeley.edu/workingpapers/157-07.pdf.
Hallock, Kevin, F. Economic Effects of Minimum Wage. Research Report. New York: Institute for Compensation Studies, Cornell University, 2012.
Novak, Mikayla. Minimum wage is anti-jobs and should be abolished. 17 May 2014. 25 Oct 2014. <https://www.ipa.org.au/news/3105/minimum-wage-is-anti-jobs-and-should-be-abolished>.
Wilson, Mark. The Negative Effects of Minimum Wage Laws. Policy Analysis Paper. Washington, DC:: Cato Institute, 2012. Web.