Question

How does minimum wage affects turnover rate and what is the impact on turnover if the employers offering higher wages than the minimum?

Answer 1

The first and foremost thing that attracts a worker towards work is the level of wages paid by the employers. If the wages are high, labor supply will be more and if wages are less, then labor supply will decrease. Imposition of minimum wage assures the workers of a guaranteed wage rate which fulfills their basic needs and also provide them opportunity to save. If a company provides minimum wages to its workrs, then the turnover rate of the company will be low because when the needs of worker are met, then they do not have to look for other jobs and this reduces the turnover rate of the company. If employers are offering higher wages than the minimum wage rate, then turnover rate will be minimum because workers are being offered efficiency wages and when efficiency wages are offered to the employees, their turnover rate will decline further as compared to the case when only minimum wages are offered.