I think this oversimplifies the effects of minimum wage. All, or at least most, workers are consumers. If workers have more money to spend, this can potentially offset the increase in costs for businesses by allowing these businesses to make more money on increased sales(although, that depends on various markets). Also, it ignores the psychology of wages too. Workers tend to work more efficiently if they are paid higher wages, especially if they feel that THEY are receiving a fair wage(not a fair wage as determined by the employer). Since workers who are more productive as a result of higher wages, they will need to work less(this is more useful for industrial or industrial-like jobs) and they will treat customers better(this is useful for retail and other low-skill service jobs). As a result, they will either need to work fewer hours or produce more in sales. Another thing would be is there is usually lower turnover and higher employee retention when it comes to higher levels of compensation/wages. As a result, there would be lower turnover costs too
Demand of goods will not increase on increasing minimum wages. Let's say 1000 workers work in a company and the wage of each worker is 1500$ per month. The total variable cost of the company will be 1,500,000$ on a monthly basis. After increasing minimum wages to 3000$ , the company cannot afford to employ 1000 workers and therefore it will employ let's say only 500 employees which makes the total variable cost the same in the two cases. The workers of this company have in aggregate 1,500,000$ to spend each month in both the cases. Thus, the demand curve is totally unaffected. Demand curve may only increase if the 500 fired employees can find jobs in other sectors. Overall, the rise in minimum wages will permanently shift the marginal cost curve leftwards which will result in less of supply. This combined with constant demand rate( if the 500 fired employees do not find jobs) will result in rise in prices and ultimately inflation.
This video is absolutely amazing!!! Really improved my understanding on this topic.
Very easy to follow when there are graphs, thank you!
What software are you using to teach the lessons? I could use something like that for biology. Nice video, by the way.
Jocab Clifford failed me this time as we need to buy his review packet , your videos are great❤
Loved the intro track
I think this oversimplifies the effects of minimum wage. All, or at least most, workers are consumers. If workers have more money to spend, this can potentially offset the increase in costs for businesses by allowing these businesses to make more money on increased sales(although, that depends on various markets). Also, it ignores the psychology of wages too. Workers tend to work more efficiently if they are paid higher wages, especially if they feel that THEY are receiving a fair wage(not a fair wage as determined by the employer). Since workers who are more productive as a result of higher wages, they will need to work less(this is more useful for industrial or industrial-like jobs) and they will treat customers better(this is useful for retail and other low-skill service jobs). As a result, they will either need to work fewer hours or produce more in sales. Another thing would be is there is usually lower turnover and higher employee retention when it comes to higher levels of compensation/wages. As a result, there would be lower turnover costs too
Demand of goods will not increase on increasing minimum wages.
Let's say
1000 workers work in a company and the wage of each worker is 1500$ per month. The total variable cost of the company will be 1,500,000$ on a monthly basis.
After increasing minimum wages to 3000$ , the company cannot afford to employ 1000 workers and therefore it will employ let's say only 500 employees which makes the total variable cost the same in the two cases.
The workers of this company have in aggregate 1,500,000$ to spend each month in both the cases. Thus, the demand curve is totally unaffected.
Demand curve may only increase if the 500 fired employees can find jobs in other sectors.
Overall, the rise in minimum wages will permanently shift the marginal cost curve leftwards which will result in less of supply. This combined with constant demand rate( if the 500 fired employees do not find jobs) will result in rise in prices and ultimately inflation.
Can you show how a Perfectly Competitive Labor Market after the introduction of minimum wage rate can go back to Equilibrium, or is it even possible.
Can you make vedio short run and long run on hiring Labor
What happens when minimum wage is lower than the equilibrium?
it has no effect because market already pays a higher wage
@@marcus5185 thank you
well explained, thank you very much.
You can't possibly type that fast...
He said less profitable