a wage creates a three to six percent

a result, employers will be forced to increase their product
prices, reduce their production, lay off their workers or close down (Mahboubi, 2017). Ultimately, all of these options decrease
profitability, and due to the self-interest motive, it is the employees who
will suffer. For example, Tim Hortons has recently increased the prices of
their breakfast items and cut some of their employee benefits, in response to
the minimum wage hike (Sagan, 2018). Some Tim Hortons locations have even gone
as far as eliminating paid
breaks, fully-covered health and dental plans (Sagan, 2018). While, Tim Hortons does argue that these are regular
changes, and are not related to the minimum wage increase, it is inevitable
that companies take measures to offset the cost increase. Similar to lower-wage
industries, youth employment will also be affected negatively, due to the
minimum wage increase. The majority of employees working minimum wage jobs, are
young, unskilled and are easily replaceable (Mahboubi, 2017). A recent study
showed that a ten percent increase in the minimum wage creates a three to six
percent decrease in youth employment (Lau, 2017). Employers are more likely to hire
experienced and skilled workers when paying higher wages, therefore it is
unlikely, for a teenager to get employed. Furthermore, companies are more
inclined to replace employees with specialized technology that will do the same
job more effectively. In the long term, this will reduce costs for the company
and ultimately be cheaper, but at the loss of many jobs. The minimum wage hike
contrasts the seven-year freeze Ontario experienced beginning in 2011 when the
minimum wage was set at $10.25 (Waterloo Region Record, 2011). If this minimum
wage hike had been distributed evenly over the seven years, instead of freezing
wages, the impact might not be as drastic. In conclusion, such a large minimum
wage raise implemented and put into effect too quickly could be difficult for
businesses to handle, resulting in an increase in unemployment (Lau, 2017).

When discussing both
fiscal and monetary policies, economists discover controversy as to how
effective these stabilization policies really are. Stabilization policies are
government policies designed to lessen the effects of the business cycle
(Lovewell, 2012). There are two types of stabilization policies, fiscal and
monetary, and of these, there are two types, expansionary and contractionary.  Expansionary policies are the focus when
discussing unemployment as the goal is to reduce unemployment. The expansionary
fiscal policy is

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