Effect of Minimum Wage on Demand and Supply - 2038 Words

---------------------------------------------------------------------------------------------------------------- In order to safeguard specific workers in low-paid, susceptible employments the minimum wage policy had been implemented by the South African government to provide assurance to these workers of a basic subsistence income. In hindsight the government saw the wage ‘floor’ as a tool to efficiently support the working poor and eradicate their poverty while facilitating the rearrangement of income in an uneven society. In light of the recent strikes brought forward by the farmworkers in the Western Cape that ultimately form part of the agricultural sector, Agricultural Minister Mildred Olifant has implemented a minimum wage policy†¦show more content†¦Figure 2 illustrates the effect of the decrease in demand of labour due to the increase in the minimum wage, and accordingly how’s how supply increases in order to reach equilibrium at this point. The law of demand states that an increase in price results in a decrease; the law of supply states that a increase i n price results in an increase in supply. These laws directly relate to what would happen in the agricultural industry with regards to employment and labour when the minimum wage increases, in the short run and ultimately the long run. Wage Rate Wage Rate Supply After Supply After Supply Before Supply Before Equilibrium Wage After Equilibrium Wage After Equilibrium Wage Before Equilibrium Wage Before Demand Demand Quantity of Labour Quantity of Labour Figure 2 : Demand and Supply of Labour in the short run Farmers will eventually suffer in the short and long run regarding the total revenue that they receive and experience lower profits. Dire consequences could arise as some farmers will have no work force and large amounts of land consequently forcing them to abandon fertile land and go elsewhere; while some small scale farms suffer immensely and required to shut down. Primarily in the short run farmers would make structural adaptations and include mechanisation and consolidation to become efficient and cost effective. With technology not being readily available andShow MoreRelatedDemand Supply , Examine the Argument in Favour Against Minimum Wage Law in Uk1415 Words   |  6 PagesAdministration Assignment: A * (Using Demand Supply: examine the arguments in favour against minimum wage law in UK*) * *Total words: 1,402 Demand It refers to the willingness and ability of buyers to purchase goods and services at different prices. Supply It refers to the willingness and ability of sellers to provide goods and services for sale at different prices What* *is minimum wage? A minimum wage is the lowest monthly, daily or hourly thatRead MoreThe Minimum Wage Law Should Not Exist1684 Words   |  7 PagesThe minimum wage law was first enacted in January 1938 (Mutari, Ellen), and since then, people have falsely been led to believe that it is beneficial to the economy as well as the general population. It has commonly been seen as a method to reduce poverty by redistributing income in order to make sure that people earn a healthy, living wage; however, evidence has shown that it in fact does just the opposite. Forcing a minimum wage goes against the free market, and severely disrupts the natural processRead MoreImpacts Of A Minimum Wage Hike900 Words   |  4 Pagesto a Minimum Wage Hike in America There has been much controversy over the years on the impacts resulting from an imposed minimum wage and how it relates to the economy. It wasn’t until President Franklin D. Roosevelt signed a Bill enacting the Fair Labor Standards Act of 1938 that American’s gained the right to a minimum threshold by which their labor could be sold. Against much opposition President Roosevelt was for a law that banned oppressive child labor and set the minimum hourly wage at .25Read MoreMinimum Wage At The United States1129 Words   |  5 Pagesintended to raise the current minimum wage floor of $7.25 in the United States stalled in Congress. As the November election approaches, many Democratic senate members are placing the issue of minimum wage at the forefront of their election campaigns, hoping to sway working-class voters in their favor. The issue of minimum wage has become a matter of politics, politics which far overshadow the far more pertinent concern of minimum wageâ€℠¢s economic effects. Minimum wage is a complex issue, and understandingRead MoreArguments for and Against the Minimum Wage in the Uk1137 Words   |  5 PagesArguments for and against the National Minimum Wage (NMW) in the UK: stop employees being taken advantage of by being paid unfair wages by their employers. set a standard of the minimum worth of a worker. This benchmark was set so that employers would be unable to hire any staff for less than the suggested hourly rate. reduce pay differentials between genders. What is the new minimum wage?: In October 2009, the NMW for workers increased from:  £5.73 to  £5Read MoreThe Negative Effects Of The Minimum Wage1282 Words   |  6 PagesMinimum Wage Should the government raise minimum wage? Should the government lower or keep the current minimum wage? Minimum wage is a very controversial topic when it is discussed between all parties. For those arguing for minimum wage increase believe that it will bring people living below the poverty line above it. 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We live in a society where government has to make balance between employers and employees. Workers want better paying job and at the same time employers want to control labour cost. Therefor government put the floor of minimum wage â€Å"a minimum wage is the lowest wage that each employee can legally get from an employer† (exclusive papers). This is the lowestRead MoreThe Price Of Minimum Wage1406 Words   |  6 Pagesanalyse and draw conclusions on minimum wage in relation to its standing in business law, we first of all need to define what the meaning of the term is. National minimum wage was introduced in 1998 through the national minimum wage act. This enforced that employers would pay each employee a set value set by the government per working hour. One of the main benefits of this was that the most low skills jobs within society received a fair wage. Setting the price of minimum wage is a complex task a s the mainRead MoreMacroeconomics Price Ceilings/Price Floors/Taxes1038 Words   |  5 Pagesregulation of the maximum price that may be legally charged. To see how a price ceiling works, we’ll examine its effects in a market for rental housing, when it is called a rent ceiling. A Rental Housing Market The demand for and supply of rental housing determine the equilibrium rent and the equilibrium quantity of rental housing available. A rent ceiling tries to change the rent. The effects of a rent ceiling depend crucially on whether the ceiling is binding or not binding. A rent ceiling is not