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Recently, there have been arguments about raising the federal minimum wage to $15 an hour. Proponents...

Recently, there have been arguments about raising the federal minimum wage to $15 an hour. Proponents argue that an increase is necessary to provide workers with a ‘living wage’ while opponents argue that such an increase could decrease employment. Using demand and supply analysis, briefly provide your opinion on whether increasing the minimum wage may have the unintended consequence of incentivizing the automation of many jobs in the American workforce. You also may find it useful to graphically illustrate your argument.

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Here, in the graph the actual equilibrium is at wage 10 and the quantity Q. Here, the demand and supply are equal. When teh government set the minimum wage artificially at $15 the demand for the labor will to B. this is less than Q and the gap between B and Q will be the increased unemployment as the firm will not hire more labor at this wage. The supply of labor will be at C.

Increased wage and less demand for labor will allow the firms to install more machinery and the job previously done by the labor will be now done by the machines. That will be the gap between B and Q.

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