Answer to Question #77419 in Management for Tayyaba

Question

if some countries a national minimumwage or a "living wage" has been set by the government.what are the drawbacks of such an approach to dealing with low pay?

Answer 1

The drawbacks of such an approach to dealing with low pay are competitiveness and jobs, and effect on relative poverty. The first means that a minimum wage can cost new jobs as a rise in labor costs affects costs to hire people. Next, it tends to boost the average incomes of middle households whereas the highest risk of relative poverty will be among the unemployed, as well as elderly parent families with the unemployed parent.