Argumentative Essay On Minimum Wage

Minimum wages are an important aspect to the working life in Australia. Minimum wages are important for many reasons, but there purpose is to protect the rights of workers who may otherwise be exploited. There are many arguments that minimum wages are bad for the economy and in fact cause unemployment. However through more in depth research, it has been found that minimum wages has increased productivity and growth. The minimum wage is also an important safety net for low unskilled workers. It is also an important part of social wellbeing and equality.

First we must ask ourselves, what exactly is the minimum wage and the purpose of it? The minimum wage is the base rate of pay an employee receives for ordinary hours worked, and is dependent

It is a highly popular theory amongst economists that minimum wage will result in an increase in unemployment. The classical approach to the effect of minimum wage on the labour force is that when the minimum wage is above the equilibrium wage it will cause unemployment. Through the early work of Brown, Gilroy, and Kohen (1982), this view became popular amongst economists. There research found that “the most frequently studied group in the empirical literature is teenagers. Time-series studies typically find that a 10 per-cent increase in the minimum wage reduces teenage employment by 1 to 3 per-cent.” (Brown, Gilroy, and Kohen,

As set out in a Survey of lit on minimum wages it states that “The main reason for suggesting that a reduction in minimum wages might benefit low-income workers is that changes in labour demand” this means that if labour demand increases then so do the number of workers who wish to work. They then go on to say “Assuming that an increase in demand translates into an increase in employment, the result will be an improvement in welfare for those workers newly employed. It is necessary to consider whether these benefits offset the reduction in welfare for low- wage workers in general.” This goes on to state that when more complex issues are incorporated into the models that they use to test the effects of minimum wage, for example the coexistence of vacancies and unemployment. The general tendency of these more realistic models is to reinforce the presumption that a reduction in minimum wages will reduce the welfare for low-income workers. This will in turn reduce welfare of society as a whole. Swinnerton (1996) gives conditions in his research where an increase in the minimum wage will increase welfare, regardless of the impact it has on