In 1996, one of the more hotly contested political issues in the United States was whether the minimum wage should be increased. Proponents of an increase in the minimum wage argue that such an increase is necessary for low-paid employees to maintain a decent standard of living. Opponents of an increase in the minimum wage suggest that an increase in the cost of labor would cause firms to fire employees to control labor cost increases—thereby harming the very group that was intended to be the beneficiary of the wage increase. Analyze the likely effects of an increase in the minimum wage from the perspective of

a. product/service quality and

b. ethical issues.

LO1