Question

Should governments implement a minimum wage, outlining a minimum amount an employee is to be paid per hour? No, minimum wage leads to under-employment by forcing companies to take on staff part-time, as they cannot afford to hire them on a full-time basis.

A. Strong
B. Weak
C. Neither Strong nor Weak
D. Cannot be determined

Answer 1

Minimum wage laws have historically had a small impact on employment, but a significant increase in the minimum wage could have a greater effect on reducing employment. There are various arguments for and against changes to minimum wage.

Step-by-step explanation:

Minimum wage laws have historically had a small impact on employment because they are typically set close to or below the equilibrium wage for low-skill labor. This means that the minimum wage does not create an excess supply of labor. However, if the minimum wage were to increase dramatically, such as doubling to match the living wages in some cities, it could have a greater impact on reducing the quantity of employment. It is important to note that the effect of minimum wage on employment is a complex issue, and there are arguments both for and against changes to minimum wage.