Question

Your city council is considering a law to raise the local minimum wage paid to all employees. Many local businesses are concerned that such a measure would significantly increase the costs of doing business. How could your city council use cost—benefit analysis to decide whether to raise the minimum wage law and, if so, by how much?

Answer 1

In order to increase minimum wages, we can perform cost benefit analysis to find out the net benefit or loss derived from the proposal of hiking the minimum wages . Cost benefit analysis is nothing but analysing the incremental costs incurred and the benefit derived from incurring those costs ,if the benefit derived is greater than the cost it's better to incur such costs . In our case increasing minimum wages increases the cost of labour, working capital requirements and morale of the labour. Morale and attitude of labour are invaluable so that these benefits should be valued by appropriate bases and after conducting serious analysis of related costs and benefits occurring as a result of increasing minimum wages, the decision can be favorably made in accordance with the economy.