Minimum wage increases are intended to benefit low-skill workers, yet unions that represent high-skill workers (electricians,...

Minimum wage increases are intended to benefit low-skill workers, yet unions that represent high-skill workers (electricians, carpenters, plumbers, etc.) are typically strongly in favor of minimum wage increases. Why?

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Expert Solution

it is true that the increase in the minimum wage rate is intended to raise the standard of living of especially low skilled workers. But from the employers' point of view, when the legal wage rate is increased, the total cost of employees they hire, increases. Employers can either replace low-skilled workers with machines or with the highest skilled workers depending upon which is more costly.

Generally, an increase in the minimum wage rate encourages the employers to replace the low skilled workers with a high skilled workers to maintain the productivity that is required to compensate for the increased wage bill. due to this reason the unions that represent high skilled workers are always in the favour of minimum wages increases.

Rahul Sunny answered 1 year ago

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