With the wage
increase, unemployed people might find it advantageous to spend their time and
effort trying to get one of those better paying jobs when they might have
been willing to work for much less, even at the old prevailing rate. A better
solution might be for an individual employer to pay workers a “living wage”
which is in economic terms, an hourly wage rate for a 40-hour work to pay rent
or housing for no more than roughly thirty-five percent of the amount earned. If
the rent is $210 weekly, this amounts to $840 monthly. $840/0.35= $2,400/160
hrs. = $15/hr. In this example the living wage may very well exceed the minimum
wage and it is offered simply as an illustration. Practically speaking, if a
firm wanted to pay its employees more it could do so by becoming more
efficient, lowering marginal costs while increasing the output from labor
(being more productive). It could become more innovative than the competitors
where it gains a monopoly position and could charge higher prices from
increased Demand, thereby passing along some of the increased profits to valued
employees who contribute to the successful outcome. So, the minimum wage might
be a good short term remedy to offset higher cost of living expenses but it may
not solve the long-term solution of pay inequity; at least not for those who
will be the most adversely impacted (economically poor, low-skilled, non-college educated,
or workers who do not have vocational/technical school training).
REFERENCES
Browning, Edgar K and Zupan,
Mark A. Microeconomics: Theory and Applications.
New Jersey: John Wiley & Sons, 2006. Print.
New Jersey: John Wiley & Sons, 2006. Print.
Parkin, Michael. Microeconomics.
New York: Pearson Addison-Wesley, 2005. Print.
Robert Randle
776 Commerce St.
#B-11Tacoma, WA 98402
May 27, 2014
robertrandle51@yahoo.com