Question

What do you think about the debate in the media regarding minimum wages and employees seeking a rise from the $7.50 level to $15?

What would happen if minimum wage was raised to $15? How would this affect the labor market? More jobs? Less jobs? Higher consumer prices? What do you think?

Answer 1

Ans) Minimum wage is set to protect workers from exploitation. It is implemented to ensure minimum standard of living to protect health and well being of workers. Setting right minimum wage is very important to protect the interests of workers. Raising minimum wage will definitely protect the interests of workers but there are several cons attached to it . So let us look at pros and cons of raising minimum wage ÷

PROS	CONS
Could spur growth and employment	Company may incur loss which may lead to unemployment and economic slowdown.
May reduce poverty by setting high minimum wage	May increase poverty due to cutting and loss of jobs
May reduce government spending on welfare schemes	May lead to loss and shutdown of companies.
It would reduce income inequality	Low skilled workers will be in disadvantage as people with low skill will not justify high wage
It will cause ripple effect and will result in increase of salary of people who are above minimum wage	May lead to shifting on robots and technology and further reduce jobs
It would lead to healthier population and workforce	It will result in decrease of employee benefits
It would help reduce federal deficit	May lead to outsourcing of jobs

Also raising minimum wage will increase the input cost of companies which will increase the cost of production and prices of product will rise. Raising minimum wage may result in reduced demand for workers while supply of workers will increase. Which will lead to less jobs in labor market.

But despite this we cannot ignore the fact that minimum wage is necessary or more aptly right minimum wage is necessary. It should not be too high or too less. Because higher minimum wage will harm both company (due to more input price) and workers ( due to less availability of jobs) . While less minimum wage will not ensure social security for workers.