ECO 201 Discussion Question Week 4

ECO 201 Discussion Question Week 4 - Wages traditionally...

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Wages traditionally are considered a market. Supply and demand for knowledge skills and abilities determine wages. Employers ‘purchase’ these skills, while individuals attempt to ‘sell’ their skills to the highest bidder. The government was lobbied to institute the first minimum wage. If you consider the economy, all things being equal, as the cost of living rises, then the wage market must rise as all other markets do. Considering that we have an artificial starting point, $7.25/hour now, the only way for real wages to rise is an increase in production. The only way for this to happen is for employees to increase their skills through education, experience and effort. This would happen regardless of the minimum wage. Real wages are also improved by companies increasing capital investment in their employees to keep their companies competitive. For example, take two equally productive workers whose job it is to clear driveways after a heavy snow. One worker is given a snow shovel and the other is given a full size truck with a plow. Which one will be more productive?
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This note was uploaded on 03/25/2012 for the course ECO 101 taught by Professor Lindsey during the Spring '12 term at Post.

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ECO 201 Discussion Question Week 4 - Wages traditionally...

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