Question

the consequences of a commonly used price floor— the minimum wage. The higher the minimum wage, the more unemployment it creates. Still , some of the workers who retain their minimum wage jobs can be said to be better off if their pay increases. Construct an argument supporting the minimum wage by citing the positives it brings

Answer 1

Answer : In case of price floor situation the market supply is higher then the market demand. So, in labor market if the price floor situation occur for minimum wage rate then the labor market face an unemployment situation. Now if the minimum wage rate rise more then the labor supply increase more where labor demand decrease more. As a result, the labor market face a rising unemployment situation. Therefore, the higher minimum wage rate create more unemployment. Because of higher minimum wage rate the production cost increases for producers. For this reason the producers raise the price level of goods and services. Because of rising price level the living cost increases which further create a need to raise the minimum wage rate. So, workers who continue their works with minimum wage rate they can say that it will be better off for them if the wage rate rise more.