The economic theory states that placing a minimum wage surpassing the market equilibrium will lead to a decrease in demand for low-wage labor, especially on some parts of the firms or organizations in the economy (Card & Krueger, 2015). Therefore, this has led to most of the companies to consider substituting other inputs with higher priced low wage employees leading to a reduction of the output of higher labor cost due to the increasing minimum wage. The rising wage has had adverse effects on the employment issues in the society, both locally and internationally. Moreover, the workers who are at or almost the minimum wage have continued to lose their jobs, due to the decreased demand for labor by most employers in the job market economy. However, in the growing economy, the effects have been in the form of minimized employment opportunities and not outright layoffs as it has been noted.
The priced-out jobs in the economy have distinguished vividly on the winners and the losers due to the increasing minimum wage placed in the global economy. The beneficiaries of the rising wage based on the employment issue are the workers who remain employed in the job market while the losers are the workers who become unemployed under the new regime that had been passed. The unemployed workers will lose because the demands for new opportunities have reduced in the economy based on the wage increment making employers to reduce the tension by decreasing the number of workers in the organization. On the other hand, the workers who have continued to work in their areas have received the increment benefit on their overall salaries (Card, & Krueger, 2015).
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The increasing wage on the economy has led to the rise of the cost of goods and services experienced over some past few years. The economy has destabilized due to the firms increasing the cost of products and services to meet the risen demands on the wage for the workers. Businesses have passed the increasing cost of the salaries of the employees to the consumers of their products and services (Card, & Krueger, 2015). Therefore, based on this the consumers of products and services are the losers to the increasing predicament on the wage while the employed workers still maintain ace the beneficial side of the bargain. Moreover, the increased higher earnings for the minimum wage workers have promoted the nature of consumer spending as compared to before the introduction of the minimum wage. These have enhanced additional demands on goods and services and thereby creating a positive response loop for economic development that has influenced the unfavorable employment effects in the economy (Lemieux, 2006).
However, this can be challenged by a decrease in demand for individuals who are unemployed due to the increasing wage, or from the employers having reduced expenditure on new investment due to the rising wage factor. In close consideration, the impact of the increasing wage has been on the employment issue and also on the cost of goods and services in the market (Card, & Krueger, 2015). The benefiting individual has been the people who are still in employment and the company, while the losers have been the workers or employees who are not employed or have lost their jobs since the firms will have reduced demands on hiring more people.
References
Card, D., & Krueger, A. B. (2015). Myth and measurement: The new economics of the minimum wage. Princeton University Press.
Lemieux, T. (2006). Increasing residual wage inequality: Composition effects, noisy data, or rising demand for skill? The American Economic Review, 96(3), 461-498.
