Effect Of Increasing Minimum Wage Rate Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Effect Of Increasing Minimum Wage Rate Case Solution

1.Minimum Wage: a Subsidy for Unskilled-labor and a Good Policy to Reduce Income Inequality

I agree with the first statement that minimum wage rate is effectively a good subsidy for unskilled labor which allows them to compete in this increasing wage rate environment where organizations usually compare the skills of a labor or employee based on their previous salaries instead of judging the labor or employee based on their job description. However, I do not agree that it is a good policy to reduce income inequality. The reason is that, these subsidies provided in the form of minimum wage rate will reduce the income inequality but it will not develop skills in those unskilled labors because of whom the company is bearing the cost of subsidies. Instead of providing subsidies; the company should spend those subsidies in the provision of training and development to the labors so they can acquire skills and expertise which in return, will help the labors to acquire high paying jobs instead of just earning through subsidies, in future. The skills and expertise acquired by the labors through training and development provided by the company instead of subsidies, which will enable the labor to increase the production capacity of the company. Through these skilled labors, the company can generate greater revenues and because of these greater revenues the company can further increase the salary of these skilled and trained labors. The company can also gain competitive advantage through the efficiency of the labors which will solely be gained by providing training and development to unskilled labors instead of providing them subsidies in the form of minimum wage rate.........

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