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  • Essay / Exploring the Challenges of America's Workers: Beyond the Minimum...

    However, Lowenstein asserts that "there are strong economic and moral arguments for a slow and steady increase." The free market argument suggests that the classic model of supply and demand taught in Economics 101 is not representative of how a labor market behaves. People behave according to what economists and Nobel Prize winner Daniel Kahneman, co-author with Jack Knetsch and Richard Thaler, wrote in a 1986 article suggesting that there is a notion of fairness that determines how people Workers accept different salary levels. There is no so-called reservation salary, which means that a mason, for example, will have a lower and acceptable salary than a doctor. There is a neutral reference point that affects how workers will or will not accept a job. Similarly, when the minimum wage increases, employees will feel underpaid if they do not earn above the minimum wage whereas they worked above the minimum wage before the increase in minimum wage.