Debate Minimum wages and the economy of america Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

MINIMUM WAGES AND THE ECONOMY OF AMERICA

We are the most powerful nation in the world. We have the most powerful economy. We are the most developed country in the world. We have the largest GDP in the world. We rule the world but do we have the best wage rate in the world?

The answer is no! We are not a nation with the highest wage rate. Why does our government not want to pay the lower class people with the highest wage rates in the world? Why is our government not so great to pay the highest wage rate?

Australia has the highest wage rate in the world. We do not even come in the top 3 of the wage rates list. Australia pays US$ 15.58 per hour as minimum wage to its labor. In America the federal government has come up with a minimum wage rate of US$ 7.25. What a great country with not great wages.

What are the factors which come in between the increase in the minimum wages and government?

Ability to pay
Demand and supply
Prevailing market rates
Cost of living
Bargaining of trade union
Productivity
Government regulations
Cost of training
Inflation
Recession

1- Ability to pay

The government of America has set a minimum wage rate, which is $7.25. The government of America has evaluated that the small industries and other small businesses will not be able to pay a minimum wage higher than this.

There can be a difference of wage rates according to the industries. Different states in America have set up different minimum wage rates as per their requirement and the demand of the people. The state has also planned to pay a minimum wage rate of $15 per hour for the labor of fast food industry. The restaurants offering fast food will employ people on a minimum wage rate at $15 per hour in the coming few years.

2- Demand and supply

The labor in America is about 47% of the population therefore,it is a very important factor to talk about the minimum wages. The demand for the employees is decreasing as the country isdevelopedand the technological development has decreased the demand for the labor. The supply of employees is the same. The supply of labor is important and the skills have a very important factor to influence the wage levels.

The supply of technical labor in low so the demand for such labor is high and the wage rate in also high for them. The demand and supply set the level of wages in a society, as more technical labor is needed the more will be the wage rates.

3- Prevailing market rates

The markets are offering minimum as the government has imposed them to pay it. If the government would not have set the minimum wages then the employers would have tried to pay lower than this and try to manipulate the labor.

The government has saved the employees from being manipulated by the employers. The government has tried to save the labor by setting the minimum wage levels so that the people are not manipulated. The market prices are influenced by the minimum wages as the employees at a minimum will ask for the minimum wages.Debate Minimum wages and the economy of america Case Solution

4-Cost of living

The employees earning minimum wage rate are the people with the low living standard. The cost of living will be increased as the minimum wage rates will increase. The increase in the wage rates will increase the prices of the goods, as the employers will be paying more than before and the cost of goods will increase as a result of the increase in wages. An increase in wages increases the cost of living by an increase in the prices of the goods and services.

The cost of living for a labor is high as high percentage of his earning goes into buying the basic necessities to live a life. An increase in wage level will allow the labor population of the country to live a better live than before. The government of the country should make reforms to increase the levels of wages so that a normal person with little skills can live a satisfactory life and can also fulfil his needs..................

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