INDIAN DOMINION

Economists are split over the merits of the minimum wage. There are some of the most convincing arguments for and against the minimum wage. This issue has become more relevant in the wake of on going debate over the wage system under MNREGA in India. Most economists believe that minimum wage laws cause unnecessary hardship for the very people they are supposed to help. The reason is simple: although minimum wage laws can set wages, it cannot guarantee jobs. In practice it often pushes price low-skilled workers out of the labor market. Employers typically are not willing to pay a worker more than the value of the additional product that he/she produces. This means that an unskilled youth who produces Rs.250/- w orth of goods in an hour will have a very difficult time finding a job if he must, by law, be paid Rs.300/- an hour. As Princeton economist David F. Bradford wrote, “The minimum wage law can be described as saying to the potential worker: ‘Unless you can find a job paying at le...