Government Control Price

In: Business and Management

Submitted By Doorela
Words 334
Pages 2
Answer the following questions fully and clearly. Be sure to explain why you answered as you did, stating the logical reasons for reaching your conclusions.
1. There are federal and state laws setting minimum wages for workers. There are also city laws setting price ceilings for housing rents.
a. Why are there laws setting minimum wages for workers and maximum rents for housing?

The laws set for minimum wages protect unskilled workers from exploitation (Gorman, 2008) and provide them with a “living wage” (Livingston, 2011). The idea of a minimum wage was created in Australia and New Zealand to reduce poverty (Gorman, 2008).

Maximum rents for housing was created to protect tenants from increased monthly rent cost by landlords (Block, 2008). Formally, rent control is known as the Emergency Tenant Protection Act; which was created during World War II in New York City (Block, 2008).
b. Why are there no laws setting maximum wages for workers or minimum rents for housing?
Setting a maximum wage law will not only hinder the economy but hurt high wage workers purchasing power. When the economy is booming, most workers receive raises, however if there is a cap placed on the wages, workers would max out their earnings. If workers production levels in one hour is 10 times what they receive in compensation, the only party benefiting in the transactions in the company. Maximum wages would also hurt the market for luxury items. Workers may be reluctant in purchasing certain luxury items because once they have reach there max wage; there is no room for wage increases.
A price control for rent was created in an effort to aid low-income families. However, placing a minimum rent would directly affect those families that have very low or no income, which can not afford a monthly rent but need a home to live in. There are rental properties that are subsidized by the…...

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