Minimum Wage

The minimum wage is a wage floor that the employers are not permitted by law to go below
(Gwartney et al.,2018). The opponents of minimum wage argue that it makes low-skilled labor
more expensive. In contrast, most proponents argue that minimum wage is a cushion offered by
the government to prevent employers from exploiting workers.
The minimum wage encourages business entities to adopt mechanization. The government’s
actions to control wage prices may have been overtaken by age in a fast-paced technological
world. Kandilov & Kandilov (2020) argue that increases in the minimum wage may lead to
higher capital investments in the agricultural sector. Through mechanization, the risks of
minimum wage increments are reduced through a trade-off in capital investment. The
proposition to increase the minimum wage is an attempt to standardize businesses. When the
minimum wage is raised, businesses have to make adjustments if the wage increase exceeds their
wage budget. There may be a freeze on hiring, reduced working hours, reduced benefits, and an
increase in prices, especially in the service-based industries (Wilson, 2012). Most businesses
operate to make profits, and as such, policy actions that reduce such profits cause the businesses
to make adjustments to comply and, at the same time, maintain their profit margins (Wilson,
2012). As such, minimum wage interferes with free-market labor economics and may erode all
the benefits it is meant to achieve. 
References
Gwartney, J. A., Stroup, R. L., Sobel, R. L., & Macpherson, D. A. (2018). Macroeconomics:
Private and public choice (16th ed.). Retrieved from https://www.cengage.com
Kandilov, A. M. G., & Kandilov, I. T. (2019). The minimum wage and seasonal employment:
Evidence from the US agricultural sector. Journal of Regional Science, 60(4), 612–627.
https://doi.org/10.1111/jors.12474
Wilson, Mark, The Negative Effects of Minimum Wage Laws (2012). Cato Institute Policy
Analysis No. 701, June 21, 2012, Available at SSRN: https://ssrn.com/abstract=2226952