Question

should the minimum wage be increased? what are the benefits of such a policy? what are the unintended consequences? defend the answer using economic concepts and be sure to compare costs and benefits.

Answer 1

The benefits are:

The primary argument raised in support of raising the minimum wage is that it would improve the overall living standard for minimum wage workers by providing them with a more acceptable level of income to accommodate increases in the cost of living. Many proponents of raising the minimum wage predict a much larger number of people and families who are escaping poverty. A potential benefit associated with this is a predicted decrease in the need for federal and state government spending on financial aid to disadvantaged and low-income people.The increased employee morale resulting from higher wages is an intangible advantage that could turn into tangible benefits for both businesses and workers

Business owners also note the difficulty of providing sufficient incentives to encourage employees to put maximum effort into their job duties, and that this is particularly problematic for low-wage workers who believe their efforts are not even able to keep them out of poverty. Rising employee morale may easily translate into more tangible benefits, such as improved retention of workers and lower hiring and training costs. Employees who are more inclined to stay longer with an organization will benefit from greater success and an overall reduction in relocation expenses related to work.

.The cons are:

Among the disadvantages of raising the minimum wage is the likely consequence of higher prices for businesses, which fuel inflation. Opponents of an increase claim that raising the minimum wage would likely result in salaries and employment growing across the board, thus significantly increasing operating expenses for corporations, which would then raise the prices of products and services to offset their increased labor costs. Increased prices mean a general increase in the cost of living that could potentially offset any profit received from employees in their wallets getting more dollars.