Price control and labor

Price controls on labor

Employment is a global issue that every economy is struggling to find the best solution to the challenges they are facing. Even in the best sober and good intentions, when done without concerns and ends up to be erroneous, then, the intentions may cause undesirable results. The case above suits the aspects most countries are instigating in their labor provisions, the minimum wage legislation. The law means that the wages rate is raised to a certain minimum level which is aimed to improve the conditions of the poor workers offering their labor. The results of such move encourages cases of chronic unemployment which afterward raise the costs of inexperienced and unskilled labor (Meer, & West, 2015). The paradox of this situation is the practice of many politicians using this case for their political interests by adjudicating for the enactment of laws that will favor deploring low wages thus promising to have wage rates rise to a minimum level by the law. According to statistics presented in the United States, the federal minimum level stands at $5.15 per hour. The level scares the employers so to say since they are other mandated fringe benefits such as social security taxes that they should pay on top of the minimum wage rate.

Most business entities are paying workers compensation that is almost amounting to more than what is being recommended as the minimum wage. If employers take the burden of paying their employees fringe benefits such as health insurance costs, the wage may end up to be double the minimum wage. The current move of the Congress is to raise the minimum wage to an amount totaling to two to three dollars in an hour. If their move succeeds, definitely most of the young people will be rendered unemployed permanently. It will negatively impact on the countries employment rate which is undesirable to an economy since unemployment is the root of many social problems such as crime and prostitution.

The unemployment rate in countries that have high minimum wage rate is high and measured in double digits despite the government heaving investing and venturing into make-work initiatives. Such cases have forced people to stay idle or depend on some other shoddy business such as black market endeavors. In black market business, the laws of minimum wages are violated among other crucial regulations and controls in the labor sector (Hirsch, Kaufman, & Zelenska, 2015). In a society that is filled with ethical disparities among the population, the young population may be discouraged to acquire skills which can be fatal. The rate of employment can rise to 100 percent in such an economy. As mentioned earlier, the situation brings discontent and fury among the youths who can relent to crime and other forms of violence. For instance, there were riots of the unemployed Americans in Log Angeles in 1992.

To conclude, few economists have the courage to give their opinion on the matter. They have claimed that the labor regulations contributes to mass unemployment in an economy. Such individuals have been condemned, criticized and denounced as ruthless agents who are only for interests of greedy employers. To get rid of the minimum-wage unemployment, countries have to restore the lost freedom in the labor market. It would eradicate the barriers in entering the job market by offering chances of employment to those willing and ready to work at the current rates.

References

Hirsch, B. T., Kaufman, B. E., & Zelenska, T. (2015). Minimum wage channels of adjustment. Industrial Relations: A Journal of Economy and Society, 54(2), 199-239.

Meer, J., & West, J. (2015). Effects of the minimum wage on employment dynamics. Journal of Human Resources.