๐ Topic Summary
Minimum wage is the lowest hourly wage an employer can legally pay its employees. It's designed to protect workers, but its economic effects are debated. Increasing the minimum wage can lead to higher earnings for low-wage workers, potentially reducing poverty and stimulating demand. However, it may also increase labor costs for businesses, possibly leading to job losses or higher prices for consumers. The actual impact depends on factors like the size of the increase, the health of the economy, and the industry.
Understanding the minimum wage helps us analyze how government policies affect employment, income distribution, and overall economic welfare. Let's test your understanding with the following activities!
๐ง Part A: Vocabulary
Match the term with its correct definition:
| Term |
Definition |
| 1. Minimum Wage |
A. A sustained increase in the general price level of goods and services in an economy. |
| 2. Labor Demand |
B. The quantity of labor employers are willing and able to hire at a given wage rate. |
| 3. Labor Supply |
C. The lowest hourly wage an employer can legally pay its employees. |
| 4. Inflation |
D. A situation in which individuals are actively seeking employment but are unable to find a job. |
| 5. Unemployment |
E. The quantity of labor workers are willing and able to offer at a given wage rate. |
โ๏ธ Part B: Fill in the Blanks
Complete the following paragraph using the words provided: increase, decrease, businesses, workers, prices.
A rise in the minimum wage aims to help low-wage ______. However, it can force ______ to raise ______, potentially leading to a ______ in consumer demand. Some economists argue it can also ______ employment opportunities.
๐ค Part C: Critical Thinking
Discuss the potential trade-offs of raising the minimum wage. Who benefits, and who might be negatively affected? Explain your reasoning.