tussle between companies and workers’ unions with regard to raising the minimum wage
There has always been a tussle between companies and workers’ unions with regard to raising the minimum wage. Employees always want to see their income rise, and this can only be realized by raising their minimum wage. Companies, on their part view raising the minimum wage as being disadvantageous to them. Most often, the impact of raising the minimum wage has been quite unpredictable as it is associated with various negative impacts, as discussed in this paper.
Economists argue that elevating minimum wage might easily hurt individuals within the low-income class. Despite raising the minimum wage, its implementation would result in a ripple effect across the entire economy. For instance, companies would be forced to increase the prices of their products so that they can remain profitable and not go bankrupt (Davies 5). Therefore, the consumers who are the common populace will see their living standards become high and unable to meet their daily needs such as clothing, groceries and rent.
In addition, increasing the minimum wage might prompt some companies to go bankrupt. Being bankrupt would mean that they might be taken over by other companies or close entirely. They might also start requesting for government to bail them out. Some might close so that they can move to other markets where labour is cheaper, and profit is assured, such as in India (Kelly).
Once companies have closed, the economy will be affected substantially. For instance, many employees who depended on that particular company would become jobless. This would become a problem for the government now as people would start demanding new jobs (Davies 7). Their lives will be affected as they will start depending on the government or well-wishers to feed themselves.