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On October 15, 2018, the Florida Department of Economic Opportunity (DEO) reported that, successful January 1, 2019, the lowest pay permitted by law in the State of Florida will increase by $0.21 from $8.25, every hour to $8.46. This expansion is attached to the DEO’s commitment under Florida law to correct the state’s lowest pay permitted by law rate yearly dependent on the government Consumer Price Index for Urban Wage Earners and Clerical Workers in the South Region. To Minimum Wage Laws in the States, the current minimum wage is $7.25 an hour. Many states use this figure or increase the wage due to their cost of living. The cost of living for most people in Florida has become unaffordable. The minimum wage is still too low first to maintain a normal living standard. People are unable to afford rent, food, and a lifestyle altogether.
The minimum wage in the market structure is a competitive market, monopoly, and oligopoly. A minimum wage had been established to protect the workforce from employers paying low wages and allow the employees to maintain a minimum living standard to protect against poverty. When there is a wage increase, it is an added expense to the company and the company needs to decide how the cost will be recouped. They will either pass on to the consumers by increasing the selling price of the goods to be sold, or they will cut the difference in wage increase from another area. Companies will look at reducing their workforce which may reduce the amount of production and/or the customer service the buyer would receive. Those with fewer skills and with less experience are normally the ones to be let go due to the increase. This will lead to many filings for unemployment benefits provided by the government increasing the unemployment rate. Deadweight loss is the cost to a society created by an inefficient allocation of resources in a market. There is no balance between labor and demand creating an unbalanced equilibrium.
Minimum wage can create this deadweight loss due to employers being required to overpay employees and provide enough low-skilled jobs in the marketplace. Price ceilings and rent control also create deadweight loss. Businesses are discouraged from building when they are small on how much they can charge for their product. Production decreases and so does the supply. There is a demand for the product but there will be little supply. In a competitive market, many suppliers, and buyers trading similar goods paying minimum wage will need to make some changes in their expenses but all the other suppliers in the same market will have to make adjustments as well. The buyer and the seller accept the price that has been determined by the market. This is of course if all follow the minimum wage laws. A market is considered a monopoly when there is a sole seller of a product and there is not a substitute for the product. The costs of goods for a monopoly are different from the competitive market.
In a competitive market, the cost is determined by the market with little say from the company. In a monopoly, the cost of the product is determined by the company. The monopoly can increase their cost of product when the minimum wage increases with little consequences to selling their product. Individuals who want the product will pay what the seller is asking for since there are no other options available. Another market structure that most companies will fall under is called oligopoly. An oligopoly is a market structure in which there are only a few sellers who offer similar or identical products. (Chaing, 2014, p. 253). In this market minimum wage, increase would affect the demand for labor and unemployment. Sellers are not in abundance in the competitive market so there is a lack of cooperation between companies as they try to monopolize the market with what they are selling. The increases in the cost of goods sold would be bad and make the company not as competitive as they would like. The company could shift where the increase in wages will come from if it wishes to hold the cost. Reducing labor to offset the costs would be one. Those with low skills and experience would be let go creating an increase in unemployment.
Maximizing profits is the main objective for the three markets. In all markets, the revenue must be higher than the costs to make money. If the company wants to increase its supply, it will need to decide if the marginal revenue will be more than the marginal cost. An increase in wages would decrease the revenue. Depending on a decline in revenue, the company may decide to lower the output of the product rather than increase it. In a competitive market, the company must keep its costs within the range of the competition to stay in business. If they increase the cost and others are not they will lose business and ultimately may have to close. In a monopoly, they can increase their prices if the consumer still feels the cost is worth the product. A monopoly can still go under if it gets too greedy and tries to overcharge for products. In an oligopoly market, the companies need to work together to maximize their profits. (Chaing, 2014, p. 253). Companies follow trends of one another, that allows them to focus on selling rather than be counter-productive by putting their energy into price wars. An increase in wages will be handled similarly so that the cost remains competitive.
The minimum wage in Florida is above the federal government’s wage, yet it is still too low. The need for an increase would be beneficial to the way of living for many. Many families have to live in the same house with another family because they cannot afford to live on their own only making minimum wage. The cost of living is too high, and the minimum wage should be increased. The only issue with increasing would be companies dismissing employees. There is too much unemployment now and an increase would not be good for our economy. Companies need to find a way to keep employees with a higher wage instead of letting people go. A minimum wage was set in place to protect the workers from being exploited by their employers. Anytime, an increase in wages is put in place a company needs to address how they are going to handle the additional expense. Whether they increase the cost of goods being sold or lay off workers which will increase the unemployment rate. The way they respond is crucial to those employed at least wage level. They will have to respond in a way to maximize their profits and hopefully, it will be to keep those employed.
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