Question

Which of the following are potential problems with using the minimum wage as a poverty-fighting tool? Choose one or more: A. Lower-income workers will earn more. B. There will be more lower-skilled workers entering the labor force looking for work and more jobs for them. C. There will be a shortage of workers in low-wage jobs. D. Employers might shift to more capital-intensive production because labor is relatively more expensive. E. Fewer low-income workers will be employed.

Answer 1

Answer:

D. Employers might shift to more capital-intensive production because labor is relatively more expensive.

E. Fewer low-income workers will be employed

Explanation:

Minimum wage is the lowest amount by law that an employer can pay to its employees. This can be used as a tool to fight poverty.

However when there is a minimum wage set, the cost of labour will be higher for employers.

There will be a tendency for employers to move to a more capital intensive production in order to reduce the cost of wages.

Also since low income earners are the beneficiaries of minimum wage, employers will tend to hire less of them and more of the higher earning workers.

The job or low income earners can be mechanised.