Question

Most government policy decisions have winners and losers. What are the effects of raising the minimum wage? It is more complex than simply producers lose and workers gain. Who are the winners and who are the losers, and what exactly do they win and lose? To what extent does the policy change achieve its goals?

Short answer

If the minimum wage is raised, there will be a greater supply of labor but a lower demand for workers.

It's more complicated than merely losing manufacturers and gaining workers.

Step-by-step solution

Definition

Minimum wage :

The legal minimum amount that businesses must pay their employees, or the price that floor workers must sell their labor for, is known as the minimum wage. The goal of the minimum wage is to protect workers from being exploited by their employers. It's expected to be enough to cover the living wage, which is the amount needed to pay for food, shelter, and clothing.

Explanation

The legal minimum wage is the amount that employers must pay their employees. It's the price below which employees won't sell their services. If the minimum wage is raised, more labor will be available, but the demand for workers would be lower. This is due to the fact that higher wages raise the cost of production. This will result in a jobless position.

Those who earn higher wages are winners, those who lose their jobs are losers. The policy change would achieve its goals as long as the gains from higher wages is greater.