Question

You are the manager of a large but privately held online retaller that currently uses 17 unsklled workers and 6 semisklled workers at Its warehouse to box and ship the products It sells online. Your company pays its unsklled workers the minimum wage but pays the semisklled workers $12.75 per hour. Thanks to government legislation, the minimum wage In your state will Increase from $10.25 per hour to $10.75 per hour on July 24, 2017. DIscuss the Implications of this legislation on your company's operations and in particular the Implications for your optimal mıx of Inputs and long-run Investment decisions

Answer 1

When the minimum wage of workers increases than the amount which I have to pay for unskilled workers will increase where as there is no need to worry about the wages of semi skilled workers as I am already paying them more than minimum wage.

So to overcome this situation as the cost of production for me increase due to increase in minimum wages ,I will try to reduce the unskilled workers and increase the semi skilled workers which save me more times as semi skilled workers are more efficient than unskilled workers.

Depending on my requirements and companies operations I will see how many unskilled workers should be removed and how many skilled workers should be increased. Another major thing if my decision in the long run works out and company runs in the profit than I again will increase the number of unskilled workers as now I am in profit where I can produce more with increase in workers.