Question

Respond too this statement on why you agree with it and what else could have been added, response must be a paragraph long, 5 sentences, cite and add a outside source from the internet too future help your information. Thank you!

"A higher minimum wage does cause an increase in unemployment in low-skilled workers. Businesses must figure out how to increase revenues in order to support the higher labor wage without passing on the entire raise to the consumer. Most companies will achieve this by cutting back on labor, paying fewer individuals who can be more labor productive. This means they will need to hire laborers who are cross skilled. The more skilled the laborer, the more labor he/she can do. When minimum wage rates were lower, a brand new to the workforce laborer, such as a 16-year-old teenager, could enter the workforce and learn new skills to help prepare him to be a more productive laborer. With a higher minimum wage, the business may not have the time to train an unskilled worker. They need to hire a skilled worker who not only knows how to run the cash register and the software programs, but they also will already have customer service skills and problem solving skills. A business who has to provide the same level of service or goods with a smaller labor force will want to hire a more skilled labor force. This means the teenager who is new and still needs to develop skills will have a harder time finding employment".

Answer 1

Imposition of high minimum wages in the labor market will lead to increase in the level of unemployment in the labor market. It has been observed that it leads to surplus of labor will leads to increase in unemployment level. This also reduces the demand for labor. The employers start looking for labor substitutes to produce output. In this case they demand more of the skilled labor who can do multi- tasking and this will also reduce their cost of production. This reduces the chances of interns being hired who need to develop skills and also need on the job training for their field. This reduces their chance of being hired. Thus price floor in the form of minimum wages will make it hard for the teenager to develop skills and thus will find it difficult to find employment in the long run.