...The authors of this paper are in search for how employers in a low-wage labor market respond to an increase in the minimum wage. Specifically the raise in the minimum wage of New Jersey (NJ) on April 1st 1992 from $4.25 to $5.05 per hour and how this effected the surrounding areas employment level. This question is of interest to students of economic because we would expect to see a case study like this follow the labor of demand theory, as wage increase, employment decreases. However this paper finding indicates that the rise of minimum wage does not reduce employment. Which for someone studying economic comes as a shock, and the opposite of the models we have learned in previous class. This paper is not alone in these findings because as mentioned in the paper its self earlier studies have come to the same conclusion. So as a student this gives us a real life example of the labor demand theory being disproven, at least for this case study. Both of the authors of this paper have credibility and useful backgrounds. Dr. David Card earned his Bachelor of Arts degree from Queen’s University in 1978 and his Ph.D. in Economics in 1983 from Princeton University. His main field of study is labor economics; having authored 4 books over 90 journal articles and book chapters, while currently teaching at the University of California Berkley. Dr. Alan B. Krueger received a Bachelor of Science degree from Cornell University in 1983, a Master’s of Arts in Economics from Harvard University...
Words: 1042 - Pages: 5
...Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania The article aims to evaluate the impact of increased minimum wage from $4.25 to $5.05 per hour in 1992 on the employees working in fast-food restaurants in New Jersey and Pennsylvania. The author has shown two comparisons in this study. One is the comparison of employment growth rates at Stores in New Jersey and Pennsylvania before and after the rise of minimum wage. And second is change in the employment rate from stores which paid higher wages initially to the changes in lower wage stores. His study concluded that there is no indication that the increase in minimum wage reduces employment. Analogous to this case study, based on the basic economic concepts, rise in the wage rate per hour have two effects – substitution effect and the income effect. If substitution effect dominates the income effect, then rise in minimum wage increases the labor supply and thus the employment rate. But if income effect dominates, then rise in minimum wage reduces unemployment. We shall understand the reason behind why rising minimum wage did not show any impact. The study analysed the 410 fast –food restaurants in New Jersey and Pennsylvania post the increase of minimum wage and compared the changes in wages, employment and prices at stores before and after such increase. Some of the other significant features of this empirical study include: first, the idea to increase the minimum wage happened...
Words: 1123 - Pages: 5
...22/06/15 The Effect of a Raise in the Minimum Wage on Employment and Profitabilty in the RMG Sector of Bangladesh, Drawing Sources From Other Developing Countries The study of minimum wages has led to many debates surrounding the topic whether a raise in minimum wage can kill businesses in profitability and employment or the change in profitability and employment is insignificant. This is a hot topic for policy makers in both developed and developing countries as a raise in minimum wage affects the economy in terms of economic growth, standards of living for the poor, survival of businesses and employment. A lot of research and literature has shown that a hike in minimum wages do not particularly affect the developed nations but the same hikes in developing countries can cause damage to firms depending on the size of the firms and their profitability. This paper attempts to show that the garments sector in Bangladesh (Ready made Garments Industry) faces the same dilemma. Since the Savar tragedy in late 2013 where a garment factory, Rana Plaza, collapsed which killed more than 1,100 people and injured and more than 2,500 people injured, garment workers and civil society demanded a raise of minimum wage from 3000 tk to 5,300 tk every month. This tragedy and similar events in developing countries lead us to think how businesses especially in the developing countries where wage rates and productivity are low can operate if minimum wage is suddenly increased threefold and why...
Words: 2415 - Pages: 10
...Introduction Minimum wage refers to the lowest hourly, daily or monthly wage an employee is legally entitled to when working. Minimum wage is in effect in a range of different jurisdictions with differences in the views on the advantages and disadvantages being disputed by people. Supporters claim minimum wage increases the standard of living for workers whilst reducing poverty. Opposite views are that if it is high enough to be effective then it increases unemployment, particularly among workers who are inexperienced or handicap, thus harming the lesser skilled workers to benefit the better skilled workers The effect on employment rates due to minimum wage rates is a highly contested policy within economics. The introduction of minimum wage into the market can lead to competitive employers cutting employment; this depends on the rate of the wage rises require to comply with the current minimum wage according to the “standard textbook model”. Other models have also been suggested in which a decline in the employment rate may not occur and in fact employment may increase. During my research I found a wide range of literature on minimum wages, particularly on the effects of a minimum wage policy in place. Though a lot of informative research was concluding I also found the argument between weather the effects and positive of negative on employment, both sides of the disagreement present a large amount of information supporting the theories. Research before the 1990’s mostly...
Words: 2611 - Pages: 11
...MEMORANDUM To: Traci Goldeman From: Debora Snaw Date: March 13, 2015 Subject: Landslide Limousines Employment Law Compliance Plan As per you request, I have developed and Employment Law Compliance Plan for Mr. Bradley Stonefield. Your instructions indicated that Mr. Stonefield will be starting a new business, Landslide Limousines, in Austin, TX. with up to 25 employees in the first year. The location and the number of employees are critical in determining the applicable employment laws. There are several laws that will become a part of the Landslide Limousines Employment Law Compliance Plan as the company grows, determined by the number of employees and the amount of business. Based on the information you have provided, I have including the following employment laws for Landslide Limousines Employment Law Compliance Plan that are applicable for the number of projected employees: Texas Minimum Wage Act, The Equal Pay Act, Title VII of the Civil Rights Act of 1964 (Title 7) and The Age Discrimination in Employment Act of 1967 (ADEA). I will provide a description of each of the aforementioned laws and the associated penalty for violating that law. Texas Minimum Wage Act ties the Texas minimum wage for non-exempt employees to the Federal minimum wage and automatically increases with the Federal minimum wage.(Dolghih, n.d.) The Texas Minimum Wage Act covers the employees of small businesses that are not covered by the Fair Labor Standards Act (FLSA). ...
Words: 1299 - Pages: 6
...ENG 111 10 March 2014 The Reasons Why Federal Minimum Wage Is Raised U.S. President Barack Obama signed an executive order on February 12, 2014 to raise the minimum wage for federal contract workers to $10.10 an hour starting next year and encouraged employers nationwide to increase wages for their workers. The president also announced during his State of the Union address last month that he intended to take executive action to raise wages for federal contract workers (Mason). Order to understand this issue, we are going to understand what the Federal Minimum Wage is and when started it in the U.S.A. According to the United States Department of Labor (USDL), early in the administration of the Fair Labor Standard Act (FLSA), it started to be apparent that the use of the legal minimum wage was prone to producing undesirable efforts upon the financial systems of Puerto Rico and also the Virgin Island if put on all their covered industries. As a result, on June 26, 1940, an amendment was passed prescribing the establishment of special industry committees to find out, and problem through wage orders, the minimum, wage levels relevant in Puerto Rico and also the Virgin islands. The rates established by industry committees might be under the legal rates relevant elsewhere within the United States. In 1949, the minimum wage was elevated from 40 cents an hour or so to 75 cent an hour so for those employees and minimum wage coverage was extended to incorporate employees in mid-air...
Words: 1800 - Pages: 8
...FREE MARKET ECONOMY According to Pmiranda2857 (2009), the free market economy is an economy which promotes competitions between businesses. Basically, without this market system, consumers would not have a say in price determination of goods and services. Some consumers in some African countries have suffered with regards to pricing. According to Baye (2010), consumers do not have a say in the price determination of some services because the providers of such services enjoy the market monopoly. However, the free market economy is the best and only realistic alternative for determining the allocation of resources in an economy because of the following: i. Competition (Pmiranda2857, 2009; Rothbard, n.d.). Without competition, the free market economy will not be what it is supposed to be. The competition between the producers is the driving force in this market, providing the consumers with the most favourable product at the most affordable price. According to Pmiranda2857 (2009), a new product is priced high in the market. After sometime, the major competitors in the market begin to imitate the innovation in the market. This leads to price reduction in the once expensive product since new and similar products begin to emerge. Pricing therefore becomes a sensitive issue in competition. Rothbard (n.d.) also concluded that competition leads to the betterment in the standards of the market competitors compared to other markets. ii. It promotes entrepreneurship and innovation (Pmiranda2857...
Words: 3199 - Pages: 13
...Raising the minimum wage would help get the economy moving again and recover from recession. Many advantages will occur by raising the minimum wage such as creating a positive impact on working families, businesses, and state economies. By increasing workers incomes, the economy will move forward due to the rise of demand. In addition, worker productivity will be improved and there will be more job employment opportunities. By creating more jobs, the significant issue of unemployment will decrease. Raising t he minimum wage is essential for establishing a sustainable economy and living wage for the people. An increase in the minimum wage will boost worker productivity and increase employee morale. Business efficiency and loyalty throughout the work place will improve. The author Kathlene McDonald mentions the importance of benefiting the living wage in her article “Same Goals, But Another Way Of Getting There” by arguing that “raising wages would create fairer working...
Words: 703 - Pages: 3
...What is the Employment Standards Act and regulations? According to the Government of BC website, the Employment Standards Act is provincial legislation put in place to protect the rights and freedoms of BC workers and employers (2011). Furthermore, the Act itself exists to ensure that there are basic standards for employment throughout our province, as well as allowing both employees and employers to be protected by these standards in the case of a dispute (bclaws.ca, 1980). The act includes regulations which outline employee’s rights with regards to such things as minimum wage; overtime and vacation pay. It is imperative for human resources professionals to understand this Act - as it not only protects organizations legally, but it helps to “attract, retain and engage diverse talent required to meet operational performance commitments…” (Dessler and Cole, 2, 2008). This act ensures employees are treated fairly and are offered opportunities to flourish in their place of work - the regulations on Vacation pay within the Act exist to promote an employee’s emotional health and happiness, as an example. Why are they needed? These regulations exist to ensure equality to all employees in our provinces and to protect against discrimination due to sex, sexual orientation, race, disability or religion. For example, every BC worker is entitled to receive $10.25 an hour (with the exception of liquor servers) under the minimum wage section of the act (labour.gov.bc.ca, 2012). This...
Words: 1041 - Pages: 5
...Employment Law Compliance Plan HRM/531 - HUMAN CAPITAL MANAGEMENT August 01, 2013 Robert Enderle Employment Law Compliance Plan MEMORANDUM TO: Traci Goldman FROM: DATE: July 31, 2013 Subject: Employment Law Compliance Plan I am tasked with creating an employment law compliance plan for a Bradley Stonefield. He is creating a limousine company that is based out of Austin, Texas. He has set a goal to have 25 employees within the first year of his business operations. So to help ensure the success of this business venture an Employment Law Compliance Plan is being developed. This memo will not only examine employment laws it will also deal with the penalties that can be enforced for noncompliance of these employment laws. This memo will address several employment laws several of these are laws will be specific to Texas and there will be some National Employment Laws. They are as follows: The Immigration Reform and Control Act of 1986, The Age Discrimination in Employment Act of 1967, The Texas Minimum Wage Law, The Texas Labor Code Anti-Discrimination Provisions, Occupational Safety and Health Act. The Immigration Reform and Control Act of 1986 The 1986 Immigration Reform and Control Act (IRCA) was the first attempt through legislation to attack the issue of unauthorized immigration. There are approximately...
Words: 1491 - Pages: 6
...Minimum Wage: The Effects of Minimum Wage on the Economy and Poverty Level in relation to Living Expenses Alison Denne Central Virginia Community College Minimum wage started with the “New Deal” program. In 1933, Roosevelt’s advisers decided to develop a National Industrial Recovery Act (NRA) to “suspend antitrust laws so that industries could enforce fair-trade codes resulting in less competition and higher wages” (Grossman, 1978). In his President’s Reemployment Agreement, Roosevelt accepted “to raise wages, create employment, and thus restore business” (Grossman, 1978). This began the arrangement of the government creating a policy for the working class. In order to offset the “overwork, underpay” regulations in the US economy,...
Words: 1836 - Pages: 8
...describe the major features of the US Department of Labor Website at http://www.dol.gov/dol/topic/health-plans/cobra.htm. The first feature is Wages Subtopics. Wages Subtopics provide additional information employees can use to help monitor their wage benefits. By choosing from the Wages subtopics list it will also help employees narrow their browsing. This information is useful so that employees and employers understand employee qualification for benefit programs. The Department of Labor enforces the Fair Labor Standard Act (FLSA), which sets basic minimum wage and overtime pay standards. These standards are enforced by the Department's Wage and Hour Division. This law was enacted in 1938. It protects workers by setting standards for minimum wage, overtime pay, record keeping and youth labor. FLSA covers full-time and part-time workers in the private sector and in federal, state, and local governments. The law may apply to you because of the type of company or organization for which you work, known as enterprise coverage, or the type of work you do, called individual coverage (Roseburg, 2013). Minimum Wage Non-exempt employees must be paid a national minimum wage established by the US Congress. As of July 24, 2009 that wage is $7.25 per hour. Some states have set their own minimum wage. The employer must pay federal or state wages-whichever is higher. Overtime Pay Employers must give overtime pay to non-exempt employees who work over 40 hours per week. They must pay these...
Words: 1793 - Pages: 8
...Employment Law Compliance Plan TO: Traci Goldeman, Manager, Atwood and Allen Consulting FROM: Yvette Calderon, Market Research Assistant DATE: February 17, 2014 Employment Law Compliance Plan Business Regulatory Enforcement Fairness Act or SBREFA was passed by the congress in 1996 because of the concerns made by small business community. SBREFA was formed to help the small business in understanding and compliance with regulations. OSHA has levied fines of various amounts for the violation of OSHA regulations. These fines can differ based on the severity of the violation (Small Business Regulatory Enforcement Fairness Act of 1996, n.d).The Texas Labor Code Anti-Discrimination Provisions Texas like many other states has its own laws for employment discrimination but employers who abide by the federal statute will be safe under the Texas state law as well. The reason for this is that the Texas Labor Code Anti-Discrimination Provisions are parallel with the Federal Discrimination guidelines. However, there is a trend throughout cities and counties with America that allow these local municipalities to have their own ordinances. In Texas, local government can and sometimes do establish their own anti-discrimination rules. In the city of Austin, several city ordinances make it unlawful to deny access to public accommodation or discriminate in employment on the basis of gender identity or sexual orientation specifically to lesbians and gays. It is also illegal to discriminate...
Words: 691 - Pages: 3
...Should UK’s National Minimum Wage be increased? "I think Britain can afford a higher minimum wage. I think we have worked hard to get to this point and we can start to enjoy the fruits of all that hard work." This was said by George Osborne the Chancellor of the Exchequer and Second Lord of the Treasury of the United Kingdom. George Osborne has signalled that he is willing to raise the national minimum wage from £6.31-an-hour to £7-an-hour, an above-inflation increase. The National Minimum Wage was set up in 1998 to protect low-paid workers; however increase in the UK National Minimum Wage will cause more harm to the economy, employment sector and even the society than the proposed good. Students will leave their primary aim of getting educated to go in search of jobs; employers will employ less number of people thereby increasing unemployment; the economy will suffer lack of growth that might get Britain into bigger debts and probably a recession. Researchers from the Respected Organisation for Economic Co-operation and Development said Britain has more teenage drop-outs than in most other countries. Almost one in five young people in the UK are not educated to A-level standard which is a shocking figure. Increasing the national minimum wage will encourage high school student to drop-out and go in search of jobs. What does the future hold for the upcoming generation? The society of today is looking to this upcoming generation to...
Words: 1009 - Pages: 5
...The Lowest Wage Name of Student Institutional Affiliation The Lowest Wage The minimum wage should remain at $7.25 as is the current level across numerous states. There have been numerous attempts to push for the raise of the minimum wage bill with a belief that the move will aid in improving the living standards of the poor and majority of the middle-class citizens. My argument against the rise of the minimum wage bill is based on some disadvantages that may arise due to an increment of the minimum wage bill. First, a rise in the minimum wage may hurt the middle class due to a resultant inflation of commodity prices. An increase in the minimum wage would mean that the employers would have to increase payments to the employees. With such a move, the employer would be forced to pass the extra costs to the consumers of their products hence inflation. Second, an increment in the minimum wage would be a threat to employment. Such an increase would lead to a rise in the payroll costs for the employers thus reducing or affecting their income. The consequence of this would be a reduction in employment, a decrease in hours of operation and even a reduction in the number of employees through layoffs. In fact, a study by the Congressional Budget Office shows that the proposed raise in the federal minimum wage to $10.10 could consequently lead to one million workers losing their jobs (Tejvan, 2015). The move would, therefore, burden the nation with high numbers of unemployed individuals...
Words: 383 - Pages: 2
