3.6.6 - The National Minimum Wage Flashcards
What is a national minimum wage?
A wage that is required to be paid by employers by law.
What is the main problem with the introduction of a NMW?
It may lead to unemployment.
What type of markets does the implementation of a NMW affect?
Labour markets where the market-determined wage rate is below the NMW rate.
(NMW set above equilbrium)
What are the arguments for a NMW?
Reduces exploitation of low-paid workers by employers.
Reduces poverty levels.
Stimulates consumption.
Decreases cost of social welfare as incomes are increased for lowest-paid.
What are the arguments against a NMW?
Employment impacts will disproportionately affect the young and unskilled.
Reduces quantity demand of workers.
Reduces profit margins of businesses that employ low-skilled workers.
Discourages further education amongst the poor.
Causes outsourcing of jobs.
What is the difference between a national minimum wage and a national living wage?
A national minimum wage is required by law.
A national living wage is voluntary.
How can trade unions affect the equilibrium point?
Trade unions can counteract the monopsonist employers of low skill workers to restore wage rates to equilibrium.
When was the NMW replaced by the NLW, and who for?
2016, but only for those aged 25 and above.
