A city mandates that all businesses who sell goods and services to the city must pay at least a living wage to their workers that is substantially above what low-skilled workers are currently being paid.Which of the following will result in a greater decrease in employment of low-skilled workers who were working for the affected businesses?

Question

Quizplus · Accepted Answer

If higher-skilled workers are readily available at the higher wage, businesses may choose to let go of low-skilled workers and replace them with higher-skilled workers who are willing to work for the higher wage. This would result in a greater decrease in employment of low-skilled workers who were working for the affected businesses. Option A and B are less relevant to the impact on low-skilled workers while option D is inconsistent with the assumption that low-skilled workers are currently being paid a low wage.

A City Mandates That All Businesses Who Sell Goods and Services