Using the article  "Living Wages, Rarity for U.S. Fast Food Workers, Served Up in Denmark" give three pieces of evidence for and against a high minimum wage. Relate its growth to the business...

Using the article  "Living Wages, Rarity for U.S. Fast Food Workers, Served Up in Denmark" give three pieces of evidence for and against a high minimum wage. Relate its growth to the business cycle at the macroeconomic level.

 

Asked on by esther77

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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There are a number of things in this article that could be used as “evidence” for or against a high minimum wage.  However, none of them can really prove whether the high minimum wage in Denmark is better than the much lower minimum wage in the US.

One piece of evidence for the higher minimum wage is the fact that Hampus Eloffson has the ability to save money from the pay he gets at his fast food job.  Many Americans who are making minimum wage are unable to save any money.  This means that they are in danger of being in serious financial trouble if they lose a job or get sick or have some other type of emergency.

Another piece of evidence is the fact that so many Americans making minimum wage are on public assistance.  This means that American taxpayers are subsidizing the companies that pay minimum wage.  The higher minimum wage takes the burden off the taxpayer and puts it on the companies that profit from the workers’ labor.

Finally, we see the fact that workers at Danish fast food places are more likely to stick with their jobs.  This is good for the workers and good for the companies.  Without the higher wage, there is a great deal more turnover.

However, there is evidence against the higher wage.  First, we see that there are fewer fast food restaurants in Denmark than in the US.  Because the prices are higher, fewer people want fast food.  The high minimum also increases costs for the restaurants and reduces the supply of fast food.  These facts mean that people don’t get as much fast food as they might want and fewer people have the chance to get work at such restaurants.

Second, the fast food restaurants in Denmark are less profitable than those in the US.  This is bad for people who might want to own such restaurants.  They are unable to make as much money as they could if the wages were lower.

Finally, you can argue that the higher wage would be a bad thing here in the US because our country is so different from Denmark.  Because our country has a lower cost of living, we don’t need to have such a high minimum wage.

As for your last question, there is not any clear connection between the minimum wage and the business cycle.  It is possible to argue that you have to be in an expansion to be able to afford to pay a higher minimum wage. However, it is not at all clear that this is true.  You could also argue that higher wages lead to greater aggregate demand and thereby make it easier for the Danish economy to avoid recessions.   

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