Question

In: Mechanical Engineering

Raising the minimum wage to $15/hr , can affect so many industries, how will this affect...

Raising the minimum wage to $15/hr , can affect so many industries, how will this affect the design opportunites for mechanical, electrical,computer engineers.

Focus on a particular industry that you think will be most affected.

Solutions

Expert Solution

according to me manufacturing industries would me more effected.
In a globalized and very competitive world companies try their best to survive while they try to create value for their partners or/and investors. For this you either will increase the sales without increasing the cost at the same rate or you will cut the costs and preferable you will do both. Employee wages have very significant effect on the costs and any increase in wages or minimum wages without productivity will damage the company's financial performance. To survive in this kind of condiditon companies in most cases will either downsize the employment by replacing them with machines or will cut the salaries or delaying increase in the salaries but by doing so workers' job satisfaction will decrese resulting unhappy workers and unproductive organization.
There are also some countries that governments employ people for certain jobs and pay them minimum wages. Increase in minimum wages create resource allocation problems. Governments are forced to allocate new reources to pay the increase but to fund that it either has to give up some other spendings or has to borrow. Borrowings some times can have some adverse effects on the economy as a whole.
And finally, once you increase the minimum wage, all the companies and institutions in the country face claims wage increases for all sectors and for all jobs. Therefore, increase in minimum wages may even affect the inflation rates of countries since increase in wages ignite increase in consumption.
Minimum wage increase must be accompanied by increase in the productivity , otherwise several and criticial problems may arise.


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