Question

Make the case for and against high minimum wage in The Bahamas. Give a scenario for each

Answer 1

In favor of high wage=

Having a high minimum case is a good initiative for the economy as it will provide more money in the hand of the employees and they can buy more products and services and thus increasing the aggregate demand of the economy. This will result in increased production and demand resulting in more investment and thus greater employment opportunities in the country

High wages will also improve the living standard of the people and the education level can also be improved as people can afford to send their kids to the schools and have good nutritious foods.

Scenario = We can consider that a person was having the minimum wage of $50 per day now the minimum wage has increased to $60 per day. This $10 will be used in the purchase of the new products and services ad this will add additional $10 in the overall economy's cycle and thus this influx of $10 per day can help the economy to boost its growth

Against High wage=

Although there may some benefits of high wages it also has the downside in the form that the companies have to pay more money to the employees and thus they will have lesser funds available for their expansions and growth opportunities. They will be having limited resources to fund the new investments that can result in more job opportunities. High wages can also cause inflation in the economy as due to more disposable income in the hands of the people, they will buy more units of the products and services causing inflation in the economy. The increased inflation will have a negative impact on the living standard of the individuals as it will increase the cost of different products

Scenario= In the above scenario, Additional $10 will provide a disposable income of $10 per day in the hand of the employee and thus he will buy more products resulting in a shortage of supply and therefore the prices of the products will increase making higher inflation rate in the country