The analysis of competitive market provides a prediction that the law of minimum wage leads in a deadweight loss for the society. However, all across the globe, governments have been using this policy. Minimum wage can be identified as the least remuneration that are to be paid by employers to the employees legally. In terms of equivalence, it is the base price which should not be reduced for the sale of labour. Though it results in the deadweight loss for the society, it has been identified that this policy is helpful in increasing the standard of living among employees, reducing poverty, reducing inequality, boosting morality and forcing organizations for maintaining more efficiency. Further ahead, minimum wages are crucial for minimizing the scope of lost jobs and ensuring the preservation of global competition (Bloom, 2014). There are several general economic conditions supporting the policy due to which this is most preferable. Some of these are labour demand and supply, inflation, normal and real GDP, levels of wage, differentials and distribution, terms of employment, growth of productivity, costs of labour, costs of business operations, the trend and number of bankruptcies, the rankings of economic freedom, the average prevailing rate of wage and the standards of living.
In big cities such as New York, unemployment holds the tendency of being lower and hence, there is not much scope in the creation of job and demand. This appears to be a big issue as there is lack of scope for increment of wage for the purpose of boosting the scope of employment. However, the costs of living and inequality are considerably high across these area. Jobs of low wage across these cities only make slightly more payment in comparison with cheaper market platforms. Yet in small places, there is still a significant scope of high end jobs (Bloom, 2014). This depicts that there are sufficiently healthy people for absorbing the increment in price before they end up becoming an issue. In the case of rising wages, business organizations may consider hiring less and investing more in automation and equipment. At the same point of time, this helps in providing the same services and goods while keeping down the costs of labour. This is done by the employment of some people at higher cost of wages. This depicts the effect of substitution on employment.