How Does Minimum Wage Affect the Economy?
Video Transcript How Does Minimum Wage Affect the Economy? Hello my name is Arielle Reid in Budapest, Hungary and I will discuss how minimum wage affects the economy. Now in a very general sense minimum wage can be understood as an artificial setting of the cost of labor. Now when the cost of labor goes up what ends up happening is you get an increase in the cost of production. So if instead of making one dollar an hour, I’m making two dollars an hour. Well the cost besides the material and the other equipment being used of making sweaters lets say, goes up by one dollar because minimum wage has gone up one dollar. An increase in the cost of production produces an increase in the cost, the overall cost of the product. Now with an overall increase in the cost of the product, you can have two very different, you can have two similar but different scenarios. Number one you get less profit because people buy less of the profit.. people buy less of the commodity because it’s more expensive
