Economics Markets Essay
The most probable result if the minimum wage for teenage workers in Australia will increase is that the employment rate will decrease. The effects on employment on the workers on the increase in the minimum wage of teenage workers will lose their job. This is because employers must retain their profit. Increasing the minimum wage of the workers will result into decrease profit of the company, thus employers will lessen their employers also decreasing their labor costs to retain their profit (Kennan 2007).
Take for example a company that aims to maximize its profit. Currently, the company’s labor force is n and the minimum wages for its employer is w. Consider a case when the company increases the minimum wage to W with no changes to other factor like profit. If this happens, the profit will decrease because of n*(W-w). The only way to regain the losses of the company that is brought by the increase in the minimum wage is to lessen its labor force n to compensate the losses.
Drastic change will occur on the employment of teenage workers in Australia because employers will consider first the adult or the professionals. Companies that need personnel with expertise on the said company will be hired first because these professional are more equipped in producing profit for the company. The figure below illustrates how employment is being affected by the increase in the rate of wage of the labors. As the wage increase, so also the gap thus increasing the rate of unemployment (David Tuerck and Paul Bachman 2005).
There are other possible outcomes when minimum wage rate will increase among teenage workers in Australia. Though many employee will be attracted on the high wage rate in Australia, there is a big possibility that companies will go to other places where there is low wage rate. Most companies now are finding their personnel on places where there is a low wage rate. This is to lessen other expenses incurred by the companies (Haussamen 2007).
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