The Minimum Wage Controversy

Le Purpose of minimum wage: Provide a wage floor that will help less-skilled workers earn enough income to escape poverty Le In SA, the Basic Conditions of Employment Act in 1999 introduced a minimum wage law lowest wage that companies must legally pay for an hour of work Case For Case Against Minimum Wage Minimum Wage Sometimes An above-equilibrium wage rate (Wu) will push wage employers back up labour demand curve con causing them to hire fewer workers a higher minimum The higher labour costs may force some firms to go produce more jobs out of business Eg) Min wage (Wc) changes the The poor, low-wage workers whom the min wage was designed firms labour demand curve to an to help, will be out of work increasing employment from Om Oc Higher wages may prompt firms to find more productive tasks for low-paid workers Minimum wage may reduce labour turnover seumtarily quit Minimum wage may reduce labour turnover seumtarily quit The case for minimum wages: MRC W W DMRP 0 Q=Q Q Wage rate (rand)