That was the conclusion of a recent study led by economist Winston Moore on The Potential Impact of a Minimum Wage on Poverty and Income Distribution in Barbados.

"Choosing the most appropriate minimum wage level involves a trade-off between employment and welfare," Moore said.

"A higher minimum wage improves the living conditions of those workers who remain in the employed labour force; however, the higher wage also results in a fall in employment hours, which can offset the beneficial effects of the legislation."

Moore, who presented the research findings at a discussion held at the University of the West Indies Cave Hill Campus last Wednesday, said employers would likely respond in one of three ways to an increased minimum wage: offer a rate higher than the given one thus increasing labour costs, use additional machinery, or close the business.

Moore, a former Central Bank economist who lectures in the Department of Economics at Cave Hill Campus, said the "minimum wage pushes more individuals into the middle-income or lower middle-income groups, and at the same time reduces the income of individuals at the bottom of the ladder".

He said that even if there were no employment effect, a ten percentage-point increase in minimum wage would only reduce the percentage of households falling below the poverty line by 0.05 of a percentage point.

And if employment effects were to kick in, a minimum wage would actually push up the poverty rate, the economist found. (SR)