Friday, March 29, 2019
The Impacts Of Minimum Wages Policy Economics Essay
The Impacts Of Minimum Wages Policy Economics hearBased on the diagram above, the standard supply of local compass before view nominal engross (P1) is at Q1. After setting stripped wage (P2), the quantity supply of local constancy increases to Q2. The quantity supply of total labor before setting marginal wage (P1) is at Q4. After setting tokenish wage (P2), the quantity rent decreases to Q3. Owing to the reason that setting minimum wage, shortages of local labor at JKL arises at the minimum wage of P2 and surplus of foreign labor at EKM arises at the minimum wage of P2.The setting of minimum fight lead increase the unemployment rate be lay down employers forget figure to hire more change employees or fewer employees to maintain healthy margins (Chotin, Finch, Eaton, Engham, Goldblatt, 2009). An example of unemployment from indexing would be Washington. Washingtons jejune unemployment in 1999 was 19.7% and as indexing was applied its teen unemployment increase to 29 .7% in course 2008 (Chotin, Finch, Eaton, Engham, Goldblatt, 2009). The following graph illustrates the growth in teen unemployment rates in Washington (Chotin, Finch, Eaton, Engham, Goldblatt, 2009). It employmentd to compargon with the unemployment rates of the roost of United States.This graph shows that when minimum wage rises companies hire fewer employees to bend. For retailers, this actor fewer employees on the floor selling, maintaining inventory and helping customers to find products. For example, bloods which concentre on customer service impart not be competent to give such sweeping employee cutbacks (Chotin, Finch, Eaton, Engham, Goldblatt, 2009). Market Basket, a grocery break in food chain based out of Massachussetts is an example of a store foc use on customer satisfaction, which faces issue on raising minimum compensation. Market Basket hires many young teens to keep the floor plentiful of employees to help the customers as much as possible. They as wel l as try to make sure the store clean, presentable and answer customers questions. Thus, when setting minimum wage, it will forces Market Basket and other operate focuses retailers cut backs in other areas (Chotin, Finch, Eaton, Engham, Goldblatt, 2009).Besides that, if the authorities setting minimum wages policy, it will simulate the productivity and efficiency of employers or producers (Chua, 2008). When thither is minimum wage policy, the producers will seek alternative way to reduce the number of employees such as trade in new machine and new technological in order to save the cost of production in long-term basis. For example, there are two equ whollyy productive swear outers assigned to clear a wooded lot. The first worker is given a shovel and an axe, the flake, bulldozer. Thus, the second worker is more productive compare with first worker because inviolable work cannot compete with better technology (Matthew B. Kibbe, 1998).In addition, minimum wages policy causes i nflation in the countrified. When the government set higher minimum wages policy, the producers are unable to cope with costs of production. It will cause the prices of all products to increase tremendously. Thus, the world, especially the low income class, would find it more tricky to stay in the high living expenditure society. Based on the economist, this known as cost-push inflation (Michael Pollick, 2010). An increase in the federal minimum wage will increase the costs of production, which subsequently results in an rarified price for consumers.Employers prefer to hire foreigners because they are charge lower wages and are more willing to work extra hours (Loh, 2009). In year 2008, foreign non-residents individuals account for 1.2 million people of the entire population and with the arrogance that foreign labor from Singapore is not foreign talent. Thus, if the country sets the minimum wages policy, it will reduce dependency on foreign labor because Malaysians will be gra nted priority in job arranging compared to foreign workers (Chua, 2008).As a result, the minimum wage policy would work out advantages and disadvantages to Malaysia and her population. To reduce the effect of the disadvantages of minimum wage, the Malaysian government needs to work out the most effective way on reducing the disadvantages of minimum wage policy so that government and population can urinate as much as benefits as hoped. The government would have to look into the details pertaining to the shortcomings of the minimum wage policy such as the chess opening of increase in foreign project instead of local labours and reach other possible problems that could arise.Question 22.1 IntroductionGross domestic Product (gross domestic product) is defined as the total market lever of a countrys return. It is the market value of all final goods and services produced inwardly a given period of time by factors of production located within a country (Case F blood, 2002). The production of a given value of goods and services would generate an equal value of income. Therefore, the necessary equality between the gross domestic product and gross domestic income indicates that the gross domestic product can be esteemd both(prenominal) as the total value of output produced and as the income generated in producing that output (Tregarthen, 1996). Therefore, in the following essay, gross domestic product per capita is used as a billhook of stinting growth and living standards of a country over a period of time.2.2 Measuring Economic Output PerformanceA countrys frugal output performance is currently measured using the GDP of the country. A method practiced by almost all countries presently. The GDP is a widely used and accepted method of stinting measurement in many countries. It is updated frequently and monitored by specific national statistical bodies to look the best accuracy of the economic measurement (Madsen, 2006). GDP enables the country planners a nd economic planners to monitor the economic trend of the country in a regular, daily basis.Despite the standardized GDP, there are many limitations to this concept. One of these limitations is GDP per capita fails to include non-marketed output and abidehold production. GDP per capita does not include the value of the stew and time put into providing household goods and services (Tregarthen, 1996). For example, a family repainted their house by themselves without using the services of a deft painter. Their time and effort was not include in the calculation of the GDP. However, if the family uses the service of a skilled painter to repaint their house, the value would be added into the GDP. These would show in the GDP. However, it does not reflect the actual increase in production. It whitethorn reflect a shift in production from a category that is not included in the GDP (eg. household production) to another category that is included.GDP also fails to include environmental degr adation (Waterson, 2010). An increasing income and growth of a country could be occuring at the expense of the environment. Fast fathering countries run a risk of causing negative externalities to the environment. The manufacturing sector could be contributing a lot to the nations GDP, however, the sector could also be the major contributor to the nimbus pollution in the area due to the smoke released. The polluted air can cause breathing problems and diseases among the neighbouring societies.Furthermore, income derived from the opprobrious market and volunteer work is not accounted for in the GDP (Madsen, Dec 2006). In the case of the black market, there are no reports of production to the government to evade assess and the law. For example, the underground activities, like prostitution, human trafficking, and drug trafficking, are very lucrative. However, they are not inform because of the law. In the case of volunteer work and kind-hearted organizations, they do not earn in come in the first place. Therefore, it is not reported in the GDP despite the output generated.2.3 Measuring Rising standardized of LivingThe most common measure of standard of living is the use of real GDP per capita (Federal Reserve Bank of Boston, 2003). Real GDP per capita is the inflation-adjusted GDP per capita. Assuming other aspects remain equal, a sustained increase in real GDP would increase the countrys standard of living provided the output increases at a faster rate compared to the total population (Riley, 2006).The advantage of using real GDP per capita is that the country planners and economy planners are able to develop economic policies and development plans since the trend in the GDP per capita at a specific period would reflect the living standards of the population (Madsen, 2006). Therefore, relating to the newspaper obligate in the question, the Prime Minister of Malaysia, Datuk Seri Najib Tun Razak, had revealed the New Economic Model 2010 because the governm ent believes that the living standards of Malaysians can be further improved.However, there are limitations to the system of real GDP per capita as a measure of living standards. The misery to consider the distribution of income is one of its shortcomings. Because real GDP per capita (per capita income) is an indicator of the clean living standard of individual members of the population, it cannot project the actual living standards of the population (Madsen, 2006). Income of the population varies according to the geographical region (Hillstrom, n.d.). Part of the population may be getting their income from the manufacturing industry whereas another part could be earning their income from the touristry sector.Per capita income also varies greatly through out the world. harmonise to Susan Dentzer in U.S. intelligence and World Report, in 1988 the top 20 percent of countries worldwide (based on annual national income) reported per capita income figures an average of 65 times gr eat than the bottom 20 percent of countries. As of the last quarter of 2009, Malaysias per capita income (Gross interior(a) Income per capita) figure stands at RM25,201 (Department of Statistics Malaysia, 2010).The real GDP also does not tamp into account the unoccupied time time . All other variables equal, more leisure time is better than less(prenominal) leisure time (Tregarthen, 1996). Consuming leisure would mean that less work effort would be supplied which means producing less GDP. For example, if the government imposes a maximum 5 office and working hours per day, the labour effort in the country would reduce significantly causing the GDP to fall. However, this does not mean that the population is worse off compared to the previous period. According to Tregarthen, the population would end up consuming more goods and services because of the extra leisure time. This situation implies that the fall in GDP would be tended to(p) by the increase in utility.2.4 ConclusionAs a conclusion, our police squad agrees that economic output performance and rising standards of living can be measure using per capita income. In our opinion, it is a safer and more prudent measure to understate a countrys economy growth than overstate it. Despite all the shortcomings of the GDP, GDP does measure the production of goods and services which are main focuses of economic output performance (Tregarthen, 1996). Until a more comprehensive and better seat is introduced, the GDP concept still holds. In the case of living standards, on the other hand, real GDP per capita can be supported by other alternative indicators which are the Genuine Progress Indicator (GPI), the humane Development Index (HDI) and the Index of Social Health.