Final answer:
Increasing the minimum wage can lead to mixed outcomes, with most receiving higher income but a minority facing unemployment. The net effect on society depends on which demographics are most affected.
Step-by-step explanation:
The impact of increasing the minimum wage on unemployment rates is a debated topic in economics. A scenario where 98% of minimum wage earners receive a 10% pay increase while 2% lose their jobs presents an ethical and economic dilemma. The gains for society can be ambiguous because while there is a significant income increase for most, the job loss for the minority can have devastating effects.
Considering which demographic is affected by job losses is crucial. If the affected individuals are primary breadwinners, the costs might outweigh the benefits. However, if the job losses impact those with less financial responsibility, such as high school students, the societal gains might be considered more substantial. These differing impacts are essential when evaluating the effectiveness of a minimum wage increase.