According to Harrop (2013), The Declaration of Independence says nothing about a right to cheap labor, but not everyone has noticed. Although, the economy seems to rely heavily on low wages when trying to attract unskilled labor. The struggles of low wage workers have driven the issue of low wage work into the nations attention. There has been national debate over whether to raise the minimum wage from the federally set wage of $7.25 per hour.
Low wages mean lower operating costs, hence greater profit for a business that may be used for capital investment, expansion, and more innovation. But what advantages are provided for workers? Many full-time workers argue that cheap labor produces poor living, and they often rely on public assistance. When companies offer these cheap wages and cant find workers for the negligible wages, labor shortages are declared. Under the law of supply and demand, when something is in short supply, the price for it rises. So if there were a shortage of unskilled workers, their pay levels would rise, right? But they have not. On the contrary, they have fallen.
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Low wages may slow economic growth but increase its sustainability. Although, when discussing and examining minimum wage throughout different economies, we must consider the market for labor. Like markets for goods, markets for labor have demand and supply curves.So a higher wage leads to a decrease in the quantity of labor demanded by employers, while a lower wage leads to an increase in the quantity of labor demanded. According to a prediction made by a recent Congressional Budget Office report, an increase of the set minimum wage could result in a loss of jobs in the United States.
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