Question

Elasticities of demand for labor

2. It has been recently proposed that the national minimum wage be reduced for teenagers in the summer month. This proposal was designed to avoid some of the pitfalls and criticisms associated with an earlier proposal to permanently reduce derived demand, what are the advantages and disadvantages of seasonal, summertime reduction in the minimum wage for teenagers as compared to a permanent year-round reduction?

Answer 1

2.

There are many advantages to the summer time reduction in the minimum wage for the teenagers. The first advantage is the increased job opportunities during the summer time for the teenagers when they have holidays from the colleges. It gives them good earning opportunities while learning the traits of the industries. The second advantage is the lower cost to be incurred for the firms, so that they can hire more teenagers for different projects, research or other profiles. So, there is a valued contribution to the output by the firms. The third advantage is the creation of paid intern opportunity for the teenagers as they can complete the work while being paid. In contrast to it, if the minimum wage is reduced for the whole year, then it will be a source of exploitation as any teenagers who are seeking full time jobs, will suffer from it and they have to work at lower wages even if they are very capable of doing the job. So, the year round reduction in the minimum wage, promotes wage inequality and wage discrimination on the basis of age.

Though, there are some disadvantages also for summer time reduction in the minimum wage for the teenagers. The first disadvantage is the increase in demand and decrease in supply as teenagers may opt for other short time vocational courses during the summer. Further, during summers, teenager employees will be laid off and other part time teenagers  will be hired to do the job. It will add volatility to the job market for teenagers.