Question

1. Does raising the minimum wage cause unemployment of low-skilled workers, in general?

2. Does raising the minimum wage cause inflation?

3. Does raising the minimum wage help to reduce poverty?

4. How does the cost of a Higher Education factor into this discussion?

Answer 1

1. Yes, raising the minimum wage causes unemployment of low-skilled workers in general. When the minimum wage increases, the cost of hiring for firms increases and they demand less number of fo workers. As a result, less number of low-skilled workers get employment now.

2. Yes, the raising of minimum wage causes inflation. Increase in the minimum wage increases the costs of the hiring of firms. Firms pass a part of these costs to consumers in terms of raising the price of goods and services. This results in a higher price level i.e. inflation.