The US showed us as an example of how this can be a problem.
The Panamanian business sector believes that increasing the minimum wage under current conditions will generate more unemployment and increase informality in the labor market.
With the possibility of an increase in the minimum wage next year, the National Council of Private Enterprise (Conep) insisted that in the context of the economic slowdown, it is not possible to increase workers’ pay.
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Julio De la Lastra, president of Conep, told Prensa.com that “… We are optimistic that the country’s economy is moving forward, that is why we are respectfully requesting a year to be able to evaluate how that economy will be and to make the same analysis so far.”
The article adds that “… Businessmen say that each 1% increase in the minimum wage represents an additional $30 million in payroll for all businesses in the country, with the greatest impact on small and medium businesses, which represent 96% of the business park.”
Since workers and employers did not reach an agreement, the government will have to decide whether or not to make adjustments in the minimum wage for the periods 2020 and 2021. The decision will have to be communicated before the end of the year.
Source: Prensa.com
The solution is education and teaching people how to be more productive. It is simple math more productive per hr worked more income overall to Panama and the people of Panama. When the income exists then distribution can be addressed. There are many factors in the distribution of wealth (which is very bad in Panama and needs to be addressed) But minimum wage is just one small piece.