Opponents have failed to take into account the demand and supply side of the argument. It is true that minimum wage legislation has increased people's purchasing power but this positive impact of the law is likely to improve economic activity in the country. This is because when people have more purchasing power naturally they can afford more goods and thus increased demand of goods leads to increased supply and this accelerates economic growth. We can understand this law better if we take into account consumer spending and its impact on the economy. In recent times, we have noticed that lack of consumer spending has speeded up the downward spiral of the economy and in its attempt to encourage people to bring more money into the market, government announced several tax cuts. Keeping this in mind, we can understand how increased purchasing power due to minimum wage law can bring positive changes in the economic conditions of the country.
Secondly, while minimum wage may not be able to improve the standard of living for every unskilled workers, still those who do manage to find a job in today's competitive market stand to benefit from this legislation because employers can no longer make them work for unreasonably low wages.
Another important argument in favor of the law deals with productivity and technological...
It is believed that with minimum wage legislation, companies are required to make use of sophisticated technologies in order to minimize the labor needed. Prasch (1996) writes in the defense of minimum wage law in these words, "Firms faced with high wages are forced to employ more advanced equipment and eliminate "X-inefficiency" or leave the industry. The result is a more productive society as newly adopted technologies and processes are embraced by the surviving firms and their competitors... The minimum wage is one among a number of factors that has the capacity to equalize bargaining power in labor markets. As such, the minimum wage enables people to "earn a living" which is an elementary component of human dignity and social justice. Thus it becomes clear why minmum law must be kept. It is the one law that can protect the poorest section from exploitation. With hundreds of poor migrants coming into the country every year, we do need a law that would allow the poor section to not against themselves. By agreeing to work for below minimum wage, they not only hurt themselves but also others who are not willing to work at such low rates. Thus minimum wage law is a must for this country.
Prasch, Robert E., in defense of the minimum wage.. Vol. 30, Journal of Economic Issues, 06-01-1996, pp…
