It might seam that a living wage is a good idea compared to a minimum wage; although, the repercussions may cause people to think differently. Living wage could cause unemployment to rise, create higher prices causing profits to decrease. If people’s income increases, people will get fired, prices will rise, and profits will decrease. Granted, a living wage could improve people’s spending immensely and decrease job turnover; however, it honestly is an erroneous decision to choose living over minimum wage.
Problems come with both living and minimum wage making it difficult to choose the form of wage to pursue. A minimum wage is a varying wage set by state law or union agreement. The questioning factor whether everyone get by on a minimum wage that can cause an unhealthy living environment. Minimum wage can also cause social problems: riots and protests. A living wage is a set wage of $12. 50 per hour that allows college, groceries, housing, and gas to be affordable. The problems that occur include rescission, increase in the price of goods, and less profit for the producer.
The consequences of a living wage hurt the poor by increasing prices defeating the purpose of an imposed living wage. Evidence supports living wage it is a respectable idea. If Americans were paid $12. 50 an hour people would spend more money. When people’s income increase their demand for goods increase. (Cooper), “If an employee at McDonalds or Pizza Hut suddenly has additional income, they could spend it at Walmart. ” Living wage also reduces employment turnover. Suppose someone gets paid $12. 50 an hour opposed to $7. 25 an hour, they’re less likely to resign from their job.
(Jillian Burham), “A review in recent research from the center of economic and policy research found that when state and local lawmakers raised the minimum wage in their areas, the move resulted in limited or no job loss. ” The positive things linked to living wage have compelling evidence, but minimum wage has a strong case too. Minimum wage is a system America has used for years there is compelling evidence it works. Walmart employees are usually younger, or the second workers in the family, and it is not a primary job. The dad in the family might work for an electrical company and the daughter might work at Walmart.
(Nita Ghei), “advocates of a higher minimum wage incorrectly assume that the increase will help many people that are supporting a family. In fact, many minimum wage workers are teenagers or people with second or third jobs in a household. ” Minimum wage also increases in salary, with time, which people often fail to remember. Employees might begin their salary at $7. 25, but with time they will rise to $9. 00, and eventually$ 12. 50. (Ralph Smith, Bruce Vavrichchek), “Over 60 % of workers who were earning the minimum wage in the mid-1980s earned an average of 20% more one year later.
” Minimum wage has impressive and powerful cases, just as much as living wage. The living wage reflects many economic qualities: supply, demand, equilibrium, and price floors. If the income of a person increases so will the demand for goods and services. People getting paid at Walmart, at higher prices, will demand more products. Producers will have to accommodations. This has an effect on the supply witch will go up, due to increase in prices, based on basic economic principles . An example of this is when living wage is booming, people will get paid more causing consumer demand to rise.
Prices will rise, causing producers to supply more. Therefore, people will spend more of there income at Walmart. Also the opportunity cost would decrease because workers get paid more, prices increase, and profit margins go down. A minimum wage is a price floor: the minimum legal price a commodity can be offered. This creates too much supply, which is a surplus, because prices are too high, and labor cheap; therefore products will not be bought. A living wage is a price floor also, because it is used to try to guarantee a certain level of income. This makes a greater surplus, because more people become unemployed.
The minimum wage makes more supply than demand. The equilibrium is set below and creates a surplus. The living wage also increases quantity supply to exceed quantity demanded which causes a greater surplus, and the prices must be set below equilibrium, because there is more supply than demanded. These economic principles play a key role in living and minimum wage. Living wage is unnecessary and does not improve economic balance. The living wage states people will receive a starting point of $12. 50 per hour at Walmart. The minimum wage starting point can be as low as 7.
25, but over time and progress workers will receive higher wages. With living wage people could get fired more often than becoming employed. If Walmart pays workers $7. 25 an hour opposed to 12. 50 they can afford to employ more people; therefore, if minimum wage goes up so will unemployment. If consumers are receiving a hi gher income, prices will rise, and people that are unemployed cannot buy the product. (Nita Ghei), “Increasing the minimum wage beyond the productivity of the worker inflicts damage on the poor and unskilled-the very people were trying to help.
” Living wage is pointless due to minimum wage just being a starting point, and not a set wage; also, it creates unemployment, and higher prices for the unemployed. Living wage and minimum wage are two wages in battle. Both of these wages have compelling evidence and unsatisfactory things about them. Minimum wage is an excellent decision: evidence proves why. Living wage also includes concrete evidence it could be the way employ Americans. The efficient wage is minimum wage, because it increases employment and has a key role in the work force. Lastly minimum wage has been working for years America should not change system.