Question

Provide a brief economic argument for allowing countries, or large cities, to set their own minimum wages rather than having a state-wide minimum.

Answer 1

Minimum wage rate can be defined as the basic and the starting range of the payment to be paid for workers.Usually these minimum wages are set so that no company,factory and other units don't pay less than the work contributed by the workers.Its still an issue for many countries to decide about setting the minimum wage rate at country or state level.It is the best  way to set the minimum wage at country level rather than state level.If the minimum wage rate is set as state wide then the wage rates would differ from one state to another state across the whole country.If the difference in wage rates among states would persist then the per capita income and gross domestic product would differ from state to state and this results in increase of backward and under developed states.If a state has high minimum wage rate then people of other states would migrate to that particular state in search of job and work.This increases in setting up of more manufacturing units in that state and remaining states suffer from low employment rate,low wage rate,less industries,low demand for labour.These factors effect the standard of living,level of production,employment rate of the states with low minimum wage rate.State wide minimum wage rate leads to development of only those states which have high minimum wage rates.It leads to concentration on development of only particular states.The states with higher minimum wage rate are benefited with high capital,more supply of labour,rise in per capita income,and the state develops within a less time leaving the other states underdeveloped.

Country wide minimum wage rate helps in maintaining stability in wage rates across the whole country.If the wages are set at country level then there would be equal distribution of capital,resources,labour and equality in establishing manufacturing units would pertain.All the states have constant employment rate with constant per capita income,gross domestic product.Raw materials and resources are used efficiently of all the states and there would equal development and growth in the economy of all the states which ultimately leads to increase in growth off economy,rise in per capita income and GDP of the whole country.This helps in  developing all the states without leaving any of the state underdeveloped.

Hence it is the best method to set the minimum wage rates at country level rather than state level as it helps in concentrating on all the states and develops them.It decreases or diminishes the regional imbalances as all the states pertain same minimum wage rate leading to development and rise in employment,supply and demand of labour,productivity,profits,etc.