Discuss the impact of raising minimum wages on minimum wage earners Essay

Discuss the impact of raising minimum wages on minimum wage earners and economy as a whole - Essay Example Increment of minimum wage has been a hotly debated issue not only by economists but also by the non-economist public (Neumark & Adams 6). On this issue, the non-economists have been largely pitted against the economists with the non-economists believing that raising minimum wage benefits employees and prevents employee exploitation by employers. On the other hand, economists are of the opinion that raising minimum wages actually hurt the very employees it is purported to help (Card & Krueger 20). This paper explores the effects of raising minimum wages for both the economy and minimum wage earners. Impacts of Raising Minimum Wages The first reason raising of minimum wages hurts the same people it is intended to help is that increasing these wages and creating laws that set them does not guarantee the public any more jobs. On the contrary, once minimum wages are increased, low-skilled workers are faced with the danger of being thrown out of the job market (Neumark & Adams 26). The rea son for this scenario is that employers will raise the skill requirements and the levels of competencies and experience and align them with the newly increased wages. In other words, employers are not willing to pay more for an employee if he or she does not increase or add value to a product in a manner commensurate with the wage increase (Card & Krueger 20). In the opinion of economists such as David Bradford of Princeton, raising minimum wages is tantamount to asking an employee to look for a job that would guarantee the said minimum wage (Neumark & Adams 15). Otherwise, such an employee may not find any job, depending on his level of skill. According to time-series data from decades of studies, it has been proved that raising minimum wages has the effect of reducing employment (American Enterprise Institute 3). This assertion is true if the rate of job losses in the current economy is anything to go by. According to current job estimates, a 10% increase in minimum wages could tr anslate into a decrease of between 1% and 2% in employment (American Enterprise Institute 4). Especially affected in this regard are young and unskilled workers, especially those from vulnerable and less academically and economically-endowed segments of the population. Besides increasing unemployment and job loss, minimum wage increment, especially the relevant laws, change workers’ systems of compensation. For instance, benefits such as free room and board, subsidized child care, on-the-job training, low-cost insurance, which are essential to low-waged and low-skilled worker compensations, are always negatively affected in cases of minimum wage increments. Employers have the tendency of controlling these benefits after minimum wage increments (American Enterprise Institute 4). In worse scenarios, when laws set minimum wages, some employers change full-time low-paying jobs into part-time high-paying jobs. Regrettably, there is rarely accompanying benefits such as reduced work ing hours. On-the-job training is the other aspect of low-wage employees that suffer reduction due to minimum wage increments (American Enterprise Institute 4). Hence, low-skilled workers lose their chance of improving their skills and opportunities to rise in rank. One benefit of reduced minimum wage, as opposed to increased minimum wage is that many employers prefer hiring unskilled workers and then

Answer questions Essay Example | Topics and Well Written Essays - 1000 words - 12

Answer questions - Essay Example Here, issues of bank overdraft are nonexistent and the business is in a good business shape. An example of when underlying circumstances may be such that the accounts receivable turnover increases one period to the next and is favorable is when the accounts receivable turnover has a high value, which shows that there is an improvement in the process of collecting cash on credit sales. An example of when underlying circumstances may be such that the accounts receivable turnover increases one period to the next and is unfavorable is when the accounts receivable turnover has a lower figure that indicated inefficiencies in collection of credit sales. A example of when the underlying circumstances may be such that the accounts payable turnover increases from one period to the next is favorable is when a company is paying its suppliers longer than it should take. This means that the company is taking advantage of discounts that come with early payment. Credit analysis refers to the method used to investigate whether a company has the financial ability to repay its obligations. It is done through the development of classification-based approach that seeks to differentiate potential defaulters from non-defaulters. The basics of credit analysis can be understood through five C’s that include character, capacity, capital, collateral and conditions. The first C, character, refers to the general impression the customer has on the prospective investor or lender. The lender comes up with a subjective opinion regarding whether the company or client can be trusted to repay a loan or generate a return from the funds that are invested into the firm. The background of the company and the experience in its particular field of business are issues that must be considered including issues of employee experience, and the quality of the references given