REACTION PAPER: LABOR MARKETS AND MINIMUM WAGE

By: Nikoli Franceska E. Joven

St. Scholastica’s College – Manila
Master of Business in Business Management

The relationships between labor markets, workers, employers, and government policies, as
well as how a minimum wage increase might affect local economies where raising the minimum
wage is a possibility. There are numerous opinions on how the minimum wage should be
determined. Some argue that any amount of money will raise the amount in circulation, thereby
increasing demand for goods and services. As a result, there will be more jobs available for those
with less work experience. This argument is based on a large supply of workers and people willing
to hire them. A second argument for raising the minimum wage is that it puts more money in
people's pockets if they work. This increase in money will enable them to buy more goods and
services, reducing the need for businesses to raise their prices on existing products due to higher
wages. The group of employees will shrink, but so will the workload per employee, which means
there will be fewer mistakes or accidents during peak periods. The video claims that the minimum
wage has no negative impact on employment, which we would expect given that it has no effect
on businesses' ability to hire new workers. A higher minimum wage means more money in
workers' pockets, which increases the demand for goods and services.

If the minimum wage should be raised, then workers would require higher pay. With an
increase in the minimum wage, more money will be in circulation, increasing demand for goods
and services. This argument is countered by claims that a reduction in employment will result in a
reduction in productivity. On the other hand, when the minimum wage does not need to be raised
because doing so will benefit small businesses by increasing the amount of money people have to
spend. Furthermore, higher wages increase job competition and reduce turnover, lowering the cost
of hiring new employees. Raising the minimum wage is necessary because we require a living
wage. There is a lot of evidence that it will increase demand, which will lead to more job creation.
It is a simple case of supply and demand economics. Workers earning the minimum wage require
an increase in order to afford purchasing goods and services. Businesses must pay higher wages
so that employees have more money in their pockets and are not burdened by high living costs.

The most important advantage of labor markets is the optimal and balanced relationship
between supply and demand, which are two important factors in determining price levels. This is
how their ability to manage and set minimum wage limits for low-skilled workers is determined.
The minimum wage ensures that unskilled workers are paid a reasonable minimum wage. When
the minimum wage is set at a level above the equilibrium, it may cause some problems in today's
economy. If the minimum wage is set at a point other than the point at which supply and demand
intersect, it results in inefficiency and a labor surplus or shortage. The real effects of high wages
versus low wages are solely determined by an employer's ability to attract and retain employees.

As an outcome, we can conclude that the labor market determines the minimum wage and
the wage level of workers is determined by their abilities and skills. When people learn the
reasoning behind implementing a minimum wage, they frequently state that it harms small
businesses, but little is said about positive job growth. Proposing that each state be able to enact a
minimum wage will help create jobs while also increasing the purchasing power of each state.