Most of exchanges of goods and services, in modern times, said to be dictated by the law of supply and the law of demand. The former being that as prices rise the greater the number of suppliers, willing and able to supply and the later, as price rise, the fewer the number of people willing and able to buy the good. The interaction of the two laws leads to the market equilibrium i.e. the point at which demand and supply meet. If there is excessive demand for a certain service or a product the price, therefore, increases. This triggers an increase in supply so that suppliers benefit from the rising price and peoples wants. This law is reflected in the labor market. If there is an excess of workers in the market, meaning that fewer companies wish to hire workers than there are workers available, the price of the labor will diminish and vice versa. Thi
s is because each individual worker is less valuable to the firm as they have alternatives. Nowadays, several governments in several different countries have adopted a minimum wage policy. The minimum wage can be defined as the smallest amount of money that employers are legally forced to pay someone who works for them. This set of rule guarantees a certain amount of money that a worker will receive for their labor. Any minimum wage is intimately connected to the economy of a community. Thus, changes to the minimum wage have knock-on effects for the local community. Increasing the minimum wage will, arguably, bring out drastic negative repercussions for whichever society. It can ultimately cause a decrease the number of jobs available in the local community and it may also cause firms and companies seek to relocate to areas with a lower minimum wage.