Current issues of micro and microeconomics

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For a long time, the subject of minimum wage has become a hot topic in the media. When it comes to this crucial issue, politicians and policymakers have taken opposing stances. Others believe that increasing the minimum wage rate at which employers are paid would have negative consequences. In this paper, we look at the New York Times article on the minimum wage. Criticism has been leveled at the newspaper's many subjects.

To begin with, the fact that the pay rate has been stuck at $7.25 for a long time is not a good excuse to raise salaries. This is because the sticky effect would have been caused by economic slowdown of the economy. As a matter of fact, around the year 2008/2009, the US economy and the world at large experienced one of the most serious financial crises since the great depression of 1930. This made the economy to grow at a negative economic growth. The trickledown effect was felt by firms as they tried to meet targets under stringent financial conditions. As such, the fact that the rate has remained at the same point for a long time is not sufficient neither does it hold waters.

In order to raise the minimum wage, very many factors have to be considered. As such the policy makers must look on other factors that may negatively impact on the economy. Such factors include the effect on government’s recurrent expenditure. This is because an increase in the wage bill of a government’s recurrent expenditure does not augur well as far as development projects are concerned. The funds meant for developmental projects are diverted for other function and this may make the economy to experience stunted economic growth.

The fact that states raise the wage rate whenever the government tends to delay in raising the wage rate means that the government has to step in as soon as possible in order to ensure it has set the pace as far as minimum wage rate is concerned. This will go a long way in ensuring that people in the United States are paid uniformly and fairly across all the states. It will also ensure that the labor market in the United States becomes orderly so as to eliminate incidences of employers exploiting employees.

From the paper we clearly see that most states have increased the minimum rate over and above that of the federal government. This implies that despite the government’s reluctance in increasing the wage rate, the various states have decided to take the bull by its horns and made the necessary increments. This does not present a good picture as it implies that the federal government may not implement the macroeconomic policies that it may wish to implement in the country. This is because the increase in wage rate may tamper with the monetary policies of the government. At the end of the day this may lead to inflationary tendencies and later on depreciation of the dollar which has the ripple effect of making the exports of the country less competitive in the global markets

The writer tries to argue that the endorsement of the citizens in the various states regarding increase in wage rate to the popularity of the idea in the whole country. This argument does not hold waters because it’s not always the case that ideas that are popular with the common people should always be implemented. Doing this may plunge into an economic crisis. This is because citizens by nature are only concerned about their economic welfare and not the condition of the country in general. In making decisions regarding pertinent issues in the society as such, it is prudent no to always consider the opinions of the general public as majority of them do not have the necessary knowledge on economic management at the macroeconomic level.

Moreover, the insinuation that setting of price floors do not necessarily lead to price increase is not sufficient. This is because the writer does not quantify how many jobs will be lost as a result of implementation of the minimum wage. Thus from the onset it is very difficult for the reader to get a deep understanding on the consequences of the proposed increment because the argument is not supported by numerical figures

Moreover, the writer’s reliance on research conducted in the United Kingdom to make a conclusion in the United States cannot be entirely relied upon. This is because the two countries can not have the same experiences. It is not the case that the results obtained in the United Kingdom will be replicated in the United States. As such, the claim is null and void and thus lacks basis.

November 09, 2022

Government Business

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