A Brief Note On Unemployment And Minimum Wage Essay

Unemployment and Minimum Wage Both the microeconomics and the macroeconomics theories dictate that an increase in the minimum wage will directly impact the rate of unemployment by shooting upwards. As of the moment, there is a heated debate on whether the Congress should pass a bill that seeks to increase United States minimum wage. The consequent change will eventually have both positive as well as negative impacts on various economical aspects particularly unemployment. As for this paper, the focus will be narrowed down to examining the link between minimum wage and unemployment rates across states and also highlighting the current state of unemployment in both Los Angeles and Seattle. In reference to microeconomic theory, the bare minimum wage is considered the price level on top of the equilibrium that is set by the demand and supply curve. A slight increase in the minimum wage greatly impacts the quantity of workers supplied in the economy by significantly increasing due to the initial heave of interest to enroll in the workforce. Similarly, there will be a decline in the quantity of demanded labor given that the marginal labor cost will directly increase as the minimum wage increases. As a result of the increased quantity supplied and the subsequent decrease in demanded quantity, there will be a creation of labor surplus in the workforce, culminating in the increased rates of unemployment. With an increase in the minimum wage on top of the normal equilibrium in theShow MoreRelatedMinimum Wage6018 Words   |  25 PagesHistory of the Minimum Wage  · 1938 -- The minimum wage was first enacted into law as part of the Fair Labor Standards Act (FLSA) of 1938. The original minimum wage applied to workers engaged in interstate commerce and the production of goods for interstate commerce. 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