Arguments for raising the minimum wage rate
- increases the income of the people_ this will inturn increase
the standard of living of the workers
- reduces the inequality _ a higher minimum wage will reduce the
gap between rich and poor to some extent. This is because an
increase in the wages increases the purchasing power of the
people.
- increases the demand for the goods and services that are
produced in the economy and this will ultimately leads to economic
growth .
- it will reduce the costs incurred by the business units for
training the workers as the old workers are less likely to leave
the company
Argiments against raising minimum wages are
- it increases the unemployment rate as the demand for labour
will be less
- this measure will induce outsourcing of job opportunities. The
job opportunities will be given to the workers in those countries
where the wage rate is less.
- It will adversly affect those companies which rely upon labour
force than caplital.
According to the law of demand and supply of labour when there
is a rise in the minimum wage rate the demand for labour will
decrease and the supply of labour will increase.
This is because when the wage rate increases the labour cost
will increase, which will inturn increases the cost of
production.
The supply will insrease as more and more workers will be
willing to do job when the offered wage rate increases