Write a disscusion of about 100150 words on the following qu

Write a disscusion of about 100-150 words on the following question!

Should we raise the minimum wage?

Solution

I think we should not raise the minimum wage.

The free-market is the most efficient way of allocating resources. Raising the minimum wage will amount to interfering with the free market. Therefore, there will be efficiency loss. So, the free market should be allowed to function and the equilibrium wage rate should be decided by the free market.

A rise in the minimum wage results in a surplus of labor. The higher minimum wage would motivate workers to be willing to supply more labor hours than the equilibrium level of supply. On the other hand, firms would demand less labor due to the higher wage. Therefore, there would be an excess supply of labor in the market. So, raising the minimum wage would result in unemployment of many workers. Also, a higher wage would result in higher costs for firms, which will translate into a higher price of goods and services. Therefore, I think minimum wage should not be raised.