Arguments for minimum wage
- Minimum wage is legal mandated price floor that makes people
receive right wages for their work.
- This supports the people to live with standard of living above
poverty.
- Minimum wage may lead to increase in productivity levels as
wages increase aggregate demand increases
Arguments against minimum wage
- This leads to increase in unemployment as employers cost
increase, they start laying off more workers.
- This results in structural unemployment which is long lasting
form of unemployment.
- It may also leads to increase in the price of product as cost
of production now increase because of increase in worker's
wages.
Thus, this policy increase the standard of living of many
workers and keep them out of poverty but government should not rely
solely on this policy only as it has its negative consequences as
well.