Discussion: Raising the minimum wages in developing countries

Our LinkedIn audience has engaged in debate over our article by T. H. Gindling, on whether increasing the minimum wage reduces poverty in developing countries.

Doug Bergren of Main Street Consulting noted that, in the past, minimum wage rises have given way to improved state economies, with increased spending and business sales.

At the same time, Business Growth veteran Al Jones posited that cheap labor “masks a lot of economic sins.” He has found that higher labor costs necessitate more “professionalism” from employers, encouraging them to invest in training to retain employees and improve their skillsets. This means that higher costs are offset by increased productivity and steady employment.

Michael Ammann, Ambassador at Greater Silicon Valley, expanded upon this point, pointing out that ignoring skills investments during wage hikes would merely pass costs back to the consumer via firms.

Deflationary economist Robert Burk warned that minimum wage rates should be indexed to inflation, noting that all business has to be done at the lowest cost possible to avoid poverty in the long-term.

The debate also turned to how further minimum wage rises could benefit the United States' economy. Business consultant Tom Macku wrote that this would have a “great effect” on reducing poverty in the West.

What do you think? Join the debate here or share your views on our Twitter page.