It has been suggested that Canada should increase its minimum wage to $15.00 per hour (Ontario has now increased the minimum wage to $15.00 per hour). Briefly discuss your thoughts on the potential pros and cons of raising the minimum wage

 

Advantages of raising the minimum wage of workers.

Raising of the minimum wage could lift as many people out of poverty. The numbers of poverty rates of low wage workers, in particular are very high, so by increasing the minimum wage, these workers would better be able to support themselves and their families.

Reduction of income inequality. Income inequality in Canada is at a rise. When there is more money for those at the bottom, who spend it at businesses who mostly employ minimum wage workers, this will in turn keep cash flowing within the lower and the middle class hence, reducing inequalities caused by low incomes.

Another benefit, to raising the minimum wage, is not only that it can raise many low wage workers out of poverty, but can also help the overall economy because, the more money workers earn through wages, the more they have to spend as consumers.

More purchasing power for low earners. It is harder for people in the Canadian province's lowest income bracket to pay for basic necessities, let alone afford property. So, it is most obvious that a higher minimum wage will put more money in the pockets of those who need it most to spend.

Step-by-step explanation

Disadvantages of raising the minimum wage of workers.

The problem with increasing the minimum wage is that they can result in higher unemployment for low-skilled workers and young people. Increases in the minimum wage, increases labor costs to employers who respond by reducing the number of employees and the number of hours worked.

It can lead to inflation. Businesses will be forced to pass the burden of balancing the increased wages with their bottom line onto the customers, by charging more for their products which will lead to inflation.

Increased minimum wages can also lead to the increase in high school drop-out rates. Duncan Chaplin and his colleagues published an important study in 2003 in the academic journal Economics of Education Review which found that higher minimum wages were related to the reduced school enrolment among teenagers.

Minimum wage increases may also reduce employment and on-the job training and benefits. Employers will often respond to increased minimum wages by reducing other benefits and on-the-job training. So, even if the workers earning the minimum wage are lucky enough to keep their job and the number of hours worked, they may still not be better off due to the reduced benefits and training.