Krugman analysis Case Solution & Answer

Krugman analysis Case Study Solution

Krugman analysis

Walmart recently announced to raise the wages of half a million of its employees. The decision made by the organization is although beneficial while comparing it with the current standards, but will not make the workers economically self-sufficient in the long run. The decision made by the organization, to increase the minimum wage rate of its employees was due to the constant pressure of not paying its employees the decent wages. So this step was taken to clear its position in the market.

I partly agree with the arguments made by Paul Krugman in this document. According to him, conservative theory explains us that wages are set by the supply and demand in the market which could be considered as a sensible counter argument to present his view that wages are rather materialistic thing like any other good, it doesn’t have anything to do with the fact that workers are human, because employers pay employees for the services an employee provides to an organization.

He also challenges the view that wages are a function of demand and supply which are set accordingly and any attempt to push the wages up or down will negatively affect the economy.  When the demand for labor increases while the supply falls then an attempt to increase wages has a positive impact. But if wages are increased more than the required limit than it is going to hurt the economy as well which is a valid point. But the kind of exaggerated comments used by Krugman could not be validated. He is comparing the scenario to the past happenings that have happened many years ago and since then the economy has completely changed. Walmart has also not taken a step in the wrong direction therefore I agree to what Krugman has explained in this article but do not support all his arguments.

All I can say that a moderate increase in the wages can be sufficed for improving the position at Walmart instead of increasing it by a greater margin and attracting critique………


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