Employers sometimes reduce the fringe benefits provided to workers when the government sets a minimum wage in the labor market.Due to this:
A)the real wage that employers pay increases by more than the money wage.
B)the real wage that employers pay declines and is at times zero.
C)the real wage that employers pay increases at the same rate as the money wage.
D)the real wage that employers pay increases by less than the money wage.

Question

Quizplus · Accepted Answer

When the government sets a minimum wage, employers may reduce fringe benefits such as healthcare, paid time off, or retirement contributions to offset the increased labor costs. This means that the total compensation package for workers may not increase at the same rate as the minimum wage, and the real wage (the purchasing power of the money wage) may increase by less than the money wage. Therefore, the best choice is D.

Employers Sometimes Reduce the Fringe Benefits Provided to Workers When