Free Essay. Economics-Walmart and the Wage Debate

The minimum wage debate mainly seeks to outline reasons for income disparities hence the emergence of class clusters. Several factors are known to result in variation in wage rates. This determination can be based on the resultant effect of supply and demand of a known commodity. However, it is important to first outline that Walmart operates under competitive market characteristics. For this case study, the main themes worth being discussed were;

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

Supply and demand at equilibrium quantity.

Demand and supply traits help in shaping market force characteristics. They help shape the equilibrium price to be used in the market. Usually, when the amount of the commodity supplied is more than that of the quantity demanded, the resultant equilibrium price is lowered. For the vice versa, the prices of commodities will balloon as a result of the number of commodities supplied being lesser than that being demanded. Such adjustments usually continue until the equilibrium price is attained. a state of equilibrium is attained when the quantity demanded is equal to that supplied.

When the pricing rates are high, the quantity demanded remains lower than that of the commodity supplied. As such, most sellers will be compelled to lower the price of their commodities in a bid to boost sales. At some point that the merchants increase their price unreasonably than the demand demographics in play, there will be a notable surplus requirement. The existence of a surplus will thus go a long way in forcing them to lower their prices. Otherwise, at lower costs, there would be more quantity demanded than that provided (Demand, n.p). As a result, all willing buyers will be made to spend much more so as to make any purchases. If the sellers reduce their prices to be any lower than the normal, at one stage they will be forced to sell all the products before they can fit into market the needs. The end results can be losing the market to sustain trades.

How price floors create a surplus

Price floors usually come about as a result of the government imposing regulated pricing mechanisms to help control the price regulation mechanisms in play. For the price floor to be considered as effective, it ought to exceed the equilibrium price put in play. The equilibrium price refers to the ideal price for which commodities supplied is equal to their demand.

The main reason for imposing price floors is to ensure the prices of commodities do not go lower than the ideal standards set. Such a happening can otherwise result in losses. One such tool used by the government to establish price floors is minimum wage. Here, the state establishes the minimum average rate per hour with which laborers can source for pay. In our case study, it is evident that such measures were being implemented. i.e. In Emeryville, an hourly wage of about $14 was added.

When price floors are used, producer, supply and consumer surpluses arise. Producer surplus refers to the profit manufacturers get by retailing commodities using price increased than the low normal prices they should have sold at. On the other hand, customer excess is the advantage received by customers since they are able to purchase a commodity for reduces prices that which they would have been ready to use. Elsewhere, Supply surpluses are bought by governments. (Courses.lumenlearning.com, np.).

How to price change increases supply.

Price refers to the monetary valuation of a commodity. Pricing mechanisms that bank on demand mainly focus on the interplay characteristics of the demand curve for the commodity being priced. When the prices of commodities hikes, the relative demand for it goes down. A fall in the price of a commodity will result in increased demand for its availability. Hence, consumers will buy more due to the fair pricing. Eventually, sales for a product are boosted; illustrating increased supply. This scenario can be demonstrated through an inward shift of the demand curve as shown. (Courses.lumenlearning.com, 2019)

Long term effect on the fixed price.

Wages eventually translate to general costs incurred in production. Should the demand for commodities be high, more persons will be involved in the manufacture of the product. As a result of high labor intensity, firms will use more money in production and reflect the incurred cost on the price. This way, high wage rates will inevitably result in high pricing of commodities within the market. In our case study, this was well demonstrated in October 2017 when high wage rates were held accountable for the 10% fall in prices.

How to price control mechanisms bolster poverty levels.

Price control schemes seek to control product pricing by outlining minimums and maximums prices to be observed. Low taxation is one such method employed. When prices are lower than expected, there will be a resultant decrease in invention and innovation. this may thus result in a substantial loss in the country's economy in a whole. Governments need to let prices play according to free play mechanisms in the economy. Also, they should consider alternative price control mechanisms that are more practical Wal-Mart's benefits and expenses have been greatly debated due to its expansion across the United States. the criticizers of the vendor have written of the levels at which Wal-Mart has undermined workers using its marketplace influence by squeezing dealers and disturbing local firs along its route. Those who support the theory pledge that lesser wage values offered by the corporate more than compensations to the United States customers for any discouraging outcome the corporation's extension has on the payments.

An important query for the forthcoming time is not whether Walmart is a better effect or a downfall in State's budget, but if it's commercial profits (and added large scale shops) can remain taken care-of. This will still occur even if they increase effort recompense. In addition, The Global insight, a consulting firm whose studies Mart's development, concludes that it has saved United States customers Us dollars263 billion. Numerical study creating this popularly recognized values fails the basic knowledge. Our understanding drafts needed in analysing monetary. leaving no available conclusions.

An effective set of exploration conclusions shows that Mart's access to the locally- run industrial marketplaces decreases the workers' wages in competing stores (Stanely n.p). This is the most effective consequence at South in which Mart's extension is extreme.

Walmart might increase the payments as well as profits meaningfully. This can be done with less hiking the values, and still, make a lot of profit. For instance, still upholding a revenue profit boundary about fifty percent higher than the major competitor called Costco, the firm coul possibly have increased payments and profits for the unsupervised workers in 2005 by more than $2,000 without raising values a coinage. Generally, I discover Global Insight analyzing procedure being troubled with complications. Some of the outcomes it brings, that the firm drops rents and the firm's utmost outcome on diet charges arose earlier than the development.

According to the past research analysis archives (2018/04), the Walmart directors outlined a depiction of the firm's future which show structures more personality checks and the grocery delivery commercial activity rapidly rising to 100 capitals out from a major plan in 6 capital towns. Local customers will put to fill plastic carriers with paper towels and avocados too from the Walmart stock tables, and then deliver the packages to car drivers lazing around in the car parks. The gathering will lack sources. Employees on handy, a connected marketplace for home-based facilities, will post small screens and gather the furniture.

Doug McMillon, president and CEO of Walmart: the large firm where almost every single State's shop involves, is not only the United States' chief private division manager but a dependable quick way for controversy. The firm's followers have shown innumerable jobs it creates for armatures while marketing low priced products, nonetheless critics liability the company's intrusion on minor industries, and the management of labors. Addition to some conducts, the firm has endeavoured fixing the pointer of community view to its service (Gerefy pg,35). Affected by years of employees' complaints, the trade master improved its lowest payment to 10 dollars an hour in 2015 not even when the opposers insist they could go as high as $15 per hour.

Supporters of an advanced least payment, nevertheless, remain unaffected. "the firm's commercial methods is pretty simple," (Amy Traub), the subordinate executive of strategy study at the fairness support assembly, during a current discussion held by I.S (IQ2) in state NY. Some bystanders have asked about the effect of an increased lowest payment on the employment, WHCEA compared engagement statistics respective of the states the increased the least pay in the year two thousand and nine downturns subsequently with the ones who did not, and create "considerable income growths without any apparent effect to service points and time operated."

Work Cited

Brunn, Stanley D. Wal-Mart world: The world's biggest corporation in the global economy. Routledge, 2006.

Courses.lumenlearning.com. (2019). Government Intervention and Disequilibrium | Boundless Economics. [Online] Available at: https://courses.lumenlearning.com/boundless-/chapter/government-intervention-and-disequilibrium/ [Accessed 10 May 2019].

Courses.lumenlearning.com. (2019). Pricing Products | Boundless Business. [Online] Available at: https://courses.lumenlearning.com/boundless-business/chapter/pricing-products/[Accessed 10 May 2019].

Demand, S. (2019). Supply and Demand Equilibrium | Intelligent Economist. [Online] Intelligent Economist. Available at: https://www.intelligenteconomist.com/supply-and-demand/ [Accessed 10 May 2019].

Gereffi, Gary, and Michelle Christian. "The impacts of Wal-Mart: The rise and consequences of the world's dominant retailer." Annual Review of Sociology 35 (2009).