Should the Minimum Wage Be Abolished Essay Example

labor costs resulting from a higher minimum wage would require reducing staff or cutting business expenses. In some cases, small companies may increase prices to cover these labor costs, potentially leading customers towards alternative products and decreasing revenue. Unfortunately, some small businesses and nonprofits may even close if they cannot handle the changes imposed by increased minimum wages. Another challenge arises when setting a standard minimum wage for a district with varying living costs since what may be appropriate in one state could be too high for others. For example, a $7 per hour minimum wage may be suitable for urban areas but excessive for rural areas.The minimum wage law can lead to higher labor costs, prompting companies to invest in automated machines as an alternative. Tasks like cash registers and online marketing can now be easily automated, reducing costs and improving efficiency. Companies strive to produce affordable yet high-quality products in order to attract consumers in today's competitive global economy. Cheaper and equally reliable products gain more attention from consumers who have the option to purchase them. By reducing labor costs, companies aim to maximize labor efficiency and meet market prices, ultimately leading to cheaper products. However, countries with high minimum wages face challenges in maintaining low product prices. Introducing a minimum wage often results in higher selling prices per product because of increased direct labor cost per hour, putting companies at a disadvantage compared to foreign states with lower or no minimum wage regulations. These foreign companies have an advantage in price control as they can hire employees at lower labor costs while also improving product quality by employing more workers. Additionally, employees

do not tolerate unfair compensation practices. Although the government has authority over companies through implementing minimum wage laws, they often overlook the broader impact.Enforcing a minimum wage has negative effects on company efficiency, competitiveness, and employment opportunities. Increasing the minimum wage annually exacerbates these issues by reducing production efficiency, lowering profits, and preventing the hiring of new workers, resulting in unemployment. As a result of these regulations, both unemployment rates and GDP decrease. The text emphasizes the relationship between unemployment, GDP, and minimum pay, stating that for every 1% increase in unemployment there is a corresponding 2% decrease in GDP. However, eliminating minimum pay can lead to a decline of 5-3% in GDP while also having positive overall impacts. The main argument presented is that implementing minimum pay laws negatively affects both unemployment rates and GDP within an economy. This viewpoint is supported by examples from countries like Singapore which have achieved success without mandating minimum pay. Despite not having such regulations, Singapore maintains consistently low unemployment rates around 2%. This information is illustrated in Table 1 of manpower statistics data from 2011 to 2012 where the country's workforce has steadily increased over time (Table 1: Manpower Statistics).