Surname 2
increased salaries. Such increment may decrease the product demand hence result in losses. The
employers at this point will have no option but to fire some of its employees so as to stay afloat,
the most affected are the unskilled employees who are the main beneficiaries of minimum wage
increment. Thus there will be a surplus of labor (Williams). Therefore increased minimum
wages will result in a surplus of labor especially of unskilled workers who are the lowest paid
and the beneficiaries of such increments as employers will decide to do away with them so as to
avoid the extra expenditures.
The objective of most business entities is to make profit, these organization does so by
trying as much as possible to reduce their expenditures on factors of production. Because human
resource are also considered to be part of the factors of production, most companies opt to hire
unskilled laborers who will work long hours at minimal pay. In most business entities nearly
70% of employees are mostly unskilled whose salaries is dictated by the management of the
organization. When the federal government comes up with laws to increase minimum wages, this
will threaten most businesses profits by increasing their expenditure on human resource
(Jeffrey). As a result, most companies will opt to invest in technologies with capabilities to do
the work previously done by the unskilled laborers and hire one skilled person to operate the new
technology, in the process millions of jobs will be lost resulting in increase in the number of
unskilled workers with no employment. Employers can also opt to hire interns in place of
unskilled workers whose minimum wages have been increased, these interns can thus work for
them for free or at a minimum wage set by the employer. In summery it is evident that increase
in minimum wage leads to unemployment especially of unskilled workers who are the main
beneficiaries of such laws. In the long run this increases the supply of unskilled labor in the
market as employers attempt to reduce its employees in a bid to maximize revenue.
