The Problem With A Wage Floor

Wage floor floor below which wages are not allowed to fall floor base a lower limit.

The problem with a wage floor.

Price ceilings and price floors. The garment industry in asia provides millions of job to millions of women and men it has been behind some of the biggest economic growth in the region. A global minimum wage not uniform across countries but based on a common formula for a living wage would raise millions out of poverty by ensuring all workers the resources necessary for a decent quality of life. The government established a wage floor based on wordnet.

But many employers interpret it as a pay ceiling something they pay to meet regulation but won t go above. But this rapid growth has come at a price and it is the workers who are paying it. Price and quantity controls. How price controls reallocate surplus.

Minimum wage and price floors. Minimum wage is an example of a government intervention in order to redistribute wealth through the use of a price floor. Employers especially small family and midsize businesses will be disproportionately hurt by the extra costs. Currently 2017 the asia floor wage is calculated to be ppp 1181.

Wage supplements were scaled by job title and educational level in order to create job ladders reward job tenure and incentivize formal educational attainment. Taxation and dead weight loss. The idea is as old as the minimum wage yet has never seriously been debated and has certainly not been implemented and with good reason. Because it is an idea that it is fundamentally flawed.

The effect of government interventions on surplus. In the case of minimum wage employees are the suppliers of labor the good while businesses become the consumers. But the real potential of a global minimum wage lies in its capacity to correct a dynamic that has for decades been eating. Wage supplement levels provided a significant boost and the model provided a strategy to address both the wage floor and the wage compression issues.

Another projected problem resulting from an increased minimum wage is that of potential job losses. From time to time politicians policy analysts and academics muse about whether the federal minimum wage should be set region by region rather than as one national floor. Minimum wage legislation only establishes an individual minimum pay floor. The minimum wage is a legally mandated price floor on hourly wages below which non exempt.

Example breaking down tax incidence. Raising the minimum wage has a number of serious and negative unintended consequences.