Neoclassical Perspective in Labor Markets and Employment Standards

LLS Assignment
Name
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Professor
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Q1.
The theoretical perspective that underlies Professor Collins’ thinking.
The theoretical perspective that closely underlies Professor Collins’ thinking is the neoclassical perspective. The perspective’s primary assumption is that labor markets operate like markets of other goods where labor is considered a commodity. The market is perfectly competitive and efficient in a bid to produce the best outcomes. As a result, employees willingly agree with their employer to supply their labor for a particular number of hours and at an equilibrium wage, which is “freedom of contract” (Doorey, 2020, pp. 40).
The market forces also offer optimal working conditions that respect and offer the best to the employees, eliminating the need for laws that govern working conditions. Also, market forces presumably work perfectly and produce the most favorable outcomes. Therefore, the government’s attempt to introduce regulations to protect workers, support unionization, and impose collective bargaining are non-market disturbances that only result in harmful consequences such as unemployment. For instance, if a market settles on a particular wage, but the government seeks to raise it, businesses can opt to close down or downsize so they can afford the wage increase while maximizing the profits (Doorey, 2020, pp. 40-41).
Do you agree? Why or why not?
I do not agree with Professor Collins’ argument or the neoclassic perspective for several reasons. One, it is built on a flawed assumption that there is a perfectly competitive labor market. According to economists, markets in the real world are seldom perfectly competitive as both workers and businesses have the power to influence wages at different levels (Doorey, 2020, pp. 40). These salary changes are influenced by aspects such as trade unions, discrimination, monopsony, geographical locations, lack of information, thus making it impossible to have a perfectly competitive market.
Second, the assumption that employees who enter into an agreement with an employer and earn minimum wage do so out of choice is flawed. Such an assumption fails to consider the existence of unemployment. Unemployment in Canada and the rest of the world affects a significant number of the population. As a result, the unemployed become desperate and since having an income is the ultimate goal, they take available jobs to earn a living. Such individuals end up making agreements with employers who pay minimum wage out of need instead of choice.
Third, I disagree with the perspective as it favors the interest of employers. Having employees accept to earn an equilibrium wage favors employers and the wealthy in the society, who exploit human labor at minimum wage while making significant profit margins (Doorey, 2020, pp. 44). Moreover, its failure to accept government intervention through legislation that protects employees or collective bargaining agreements depicts a perspective seeking to exploit employees in the guise of a contract, which creates economic inequality.
The perspective that most closely resembles my own thinking and why
The perspective that closel...