Final answer:
Increasing minimum wage could lead to employers favoring capital-intensive production, potentially reduce employment for low-income workers, and set barriers for lower-skilled workers, although some effects might be mitigated by higher worker productivity and spending.
Step-by-step explanation:
The potential problems with increasing the minimum wage relative to other poverty-fighting tools include potential shifts in employer behaviors and impacts on the labor market. Firstly, employers might shift to more capital-intensive production if labor becomes relatively more expensive, as mentioned in statement A.
Secondly, there's the possibility of fewer low-income workers being employed due to increased labor costs, aligning with statement B.
Notably, this doesn't always translate into fewer jobs; instead, demand due to increased income could stabilize employment, and higher wages might lead to more productive workers.
However, well-known economists like Walter Williams and Thomas Sowell suggest that higher minimum wages could pose employment barriers for lower-skilled workers, potentially reducing their employment opportunities and limiting economic mobility.