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Minimum wages is a price floor set by the government This regulation makes hiring labour below a specified wage illegal The governments intention by setting this price floor is to elevate the wages of unskilled and low-paid workers and lift them from poverty But there is disagreement among economists whether this legislation really benefits the pour in the long run Some actually means that minimum wages causes unemployment In the labour market the employers will have some monopoly power over the unskilled workers and they will always try to decrease the wages profit maximizing firms Pour people are better of with an underpaid job than no job and this makes them vulnerable for being exploited by employers When the government set in a minimum wage they prevent firms from exploiting the pour and low-paid workers This moral aspect is the main argument for the proponents of minimum wages However this regulation can result in firms moving their production to other countries who have no minimum wage legislation You can see this happening to many large firms like Nike and Gap And it is not good fore the labour market in the UK There is another dilemma When the wages rise youths find it tempting to quit school and start in a job People know that they will receive a good wage whatever kind of job they start in so they do not bother to educate themselves More unskilled workers may then be the consequence of a minimum wage regulation A good effect that comes with minimum wage is loyalty When employees get paid better they feel obligation towards the firm they work harder and more efficient This can further lead to more efficiency in the firms around the UK A minimum wage regulation will increase the real wages in the labour market as higher paid workers try to raise their wages to keep the same differentials with the lowest paid workers This leads to
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