Critical Analysis of the Minimum Wage
 
In the article, the author shows his opinion about the minimum wage policy in a comprehensive way. The core principle of the minimum wage policy is to transfer income to these low-wage workers. According to the opinion of the author, he thinks that the minimum wage policy is unfair and unwise to put the entire burden of the group to the small special segment of the population. When implementing the minimum wage policy, the owners and customers of businesses usually will have shoulder more pressures if the minimum wage policy were implemented by the government. The author uses a series of factors to explain the irrationality of the minimum wage policy in a comprehensive way. On one hand, the owners and customers of businesses are not responsible for helping these employees with low incomes. In other words, the society can not establish effective mechanism to protect the corresponding benefits of the owners and customers of businesses. It means unfair to other groups in the society. From the perspective of the employees with low wages, they might become reliable on the government and social help. As a result, they might not try their best to work because they still can get some helps from other groups.
 
The analysis of the author is rational to a large extent. According to the common economical principles, there is no free lunch in the world and everyone has to work for their life. To some extent, the minimum wage policy means the resource wasting (Wascher, 2007). The following table shows the work mechanism of the wage minimum policy.
 
Chart 1 the Minimum Wage Policy
 
As can be seen from Chart 1, the equilibrium wage of the whole labor market is W, and the labor demand and supply is equal at this point. For employees with poor skills, the wage level is W’ which is resulted from the labor supply and demand. While taking the minimum wage policy into consideration, the equilibrium wage increases to W’’. In this process, the labor demand will decrease and it means that more and more poor-skilled employees will not find the job in the market. From the perspective of the government policy, the purpose of the minimum wage policy is to improve the work of employees with poor skills but it does not realize to a large extent. On the contrary, more employees with poor skills lose their jobs. As a result, their life situation becomes worse and worse. For these poor-skilled employees who can still find a job in the market, they can benefit from the minimum wage policy but the owner of the business has to pay extra costs in hiring these employees. In other words, the government disturbs the balance of the job market by implementing the minimum wage policy.
 
At the same time, the minimum wage policy will encourage more employees to become poor-skilled employees so as to get social supports from the whole society (Neumark, 2009). In addition, the minimum wage policy would put more people into the poor situation. So the minimum wage policy must be taken into serious consideration before implementing in the whole society even if it has some positive meanings. From this perspective, the government should not set the minimum wage at a high level and it should try to find a balance between the benefits of poor-skilled employees and others in the society. For the government, it should balance each aspect of the whole society and try to find a balance among all events, which is trying to find a comprehensive solution.
 
In order to maximize the function of the minimum wage policy, the government and the whole society must take a series of corresponding measures. On one hand, the government should establish effective mechanisms to improve the quality and skills of employees (Boeri, 2012). This can largely brings a lot of new opportunities for their career development. In a corresponding way, the labor market will become more competitive and it is helpful for improving the whole quality of the human resource step by step. On the other hand, the government should establish effective reallocation mechanism in the whole society, that is, to treat every employee in an equal way. According to the famous economical principle, there is no free lunch in the world and everyone needs to work so as to make their life by themselves. By implementing these two measures, the government can take the place of the controversial minimum wage policy to a large extent.
 
References
Boeri, T. 2012. Setting the minimum wage. Labor Economics, vol.19, no.3, pp. 281-290.
 
Neumark, D. 2009. The effects of minimum wages throughout the wage distribution. Federal Reserve Bank of Cleveland Working Paper, NO. 9919.
 
Wascher, W. 2007. Minimum Wages and Employment. IZA Discussion Papers, NO. 2570.