The official said he did not believe the survey's findings would be outdated when the wage was being determined. "The survey is only one of the factors for the commission in determining the rate," the official said. "The commission will also take more recent information like the standard of living, labour market conditions, economic growth and inflation into account."
The official also said the figures in the survey could not be used to estimate the number of workers likely to be sacked when a rate was set. "It only tells you the number of workers getting a certain wage, but it would be wrong to estimate how many workers will be out of a job when a rate is set. Employers may decide to cut into their profits to give more to the workers. They may ask workers to work fewer hours or they might raise the price for their products or services."
In 1996, Congress approved an increase in the minimum wage, from $4.25 to $5.15per hour. In the following viewpoint, written in 1995, John McDermott argues in favorof that wage hike. He contends that an increase in the minimum wage would increaseemployment and could help raise the bottom quarter of the workforce above thepoverty line. However, McDermott asserts, the minimum wage can only be trulyeffective if it is large enough for families to live on comfortably. McDermott is an editor of Socialism and Democracy and the author of Corporate Society.
questions:
1. What is the "ripple" effect of increasing the minimum wage, according to McDermott?
2. In the author's view, what is one harmful effect of the current wage structure?
3. According to the National Welfare Rights Organization, as cited by the author, how much should the minimum wage be?
Traditional economic theory and its partisans take the position that increasing the minimum wage must cause unemployment because it "artificially" inflates wages. It's a simple argument: Employees normally produce just about enough to offset their own wages. A higher minimum wage means that some workers won't produce enough to justify their higher wages, and will therefore have to be fired. In the jargon of professional economists, it makes some workers' wages higher than is justified by their "marginal revenue product" (what they contribute to the firm's output).
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