Question

How will employers respond to an increase in the minimum wage?

a.They complain about paying the higher wages, but do not change the number of workers they employ.

b.They expand the training opportunities offered to low-skill workers.

c.They reduce their labor force and/or hire more experienced, skilled workers.

d.The profits of the employers are transferred to the employees.

Answer 1

Option C.

• When the minimum wages rise, not all people or worker's in the labour force benefit from it.
• This is because, the employer's will try to compensate the rise in wages by reducing the labour force and they Demand more experienced and skilled worker's.
• This will decrease the demand for less skilled worker's or worker's from poor background as they get laid off when the employer's reduce their labour force when minimum wages rise.