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Do you support higher minimum wages?

Do you support higher minimum wages?

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Answer #1

Higher minimum wages draw support from the fact that labour demand in most of the labour markets is highly inelastic. Also note that minimum wages are applicable mostly for unskilled labour because skilled labour are paid a wage rate which is already greater than the minimum wage

in such condition when there is a minimum wage set up in the market for unskilled labour will inelastic demand of labour, the resultant unemployment is not sharp and total wage bill of employers does not increase exorbitantly. Due to this reason it is generally articulated that benefits of higher minimum wage exceed the cost

however there is a social cost of such unemployment which must be considered while comparing the cost and benefits. Unskilled workers who are displaced by such a higher minimum wage are not likely to getare not likely to get jobs elsewhere in the economy. The are most likely to end up as a part of parallel economy by doing criminal activities such as theft, robbery, drugs trafficking etc. There is a loss of dignity when a person remains unemployed for a longer period of time. Due to these reasons, the support for minimum wage is largely mitigated.

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