Why Minimum Wage Hurts the Economy: Difference between revisions
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The laws of supply and demand apply for the labor market just as they do for other markets. If the government raises the minimum wage (the price of labor), employers will demand fewer employees. At the same time, the supply of labor increases in response to a higher minimum wage. The final result is more workers looking for fewer jobs. | The laws of supply and demand apply for the labor market just as they do for other markets. If the government raises the minimum wage (the price of labor), employers will demand fewer employees. At the same time, the supply of labor increases in response to a higher minimum wage. The final result is more workers looking for fewer jobs. | ||
[[Image:Etp261.gif|thumb|Description]] | <p align="center">[[Image:Etp261.gif|thumb|Description]]</p> | ||
If we have a minimum wage increase above the equilibrium point, the amount of labor supplied is much greater than the amount of labor demanded | If we have a minimum wage increase above the equilibrium point, the amount of labor supplied is much greater than the amount of labor demanded | ||
Revision as of 03:52, 29 November 2006
Introduction Hurts Economy Helps Economy
Introduction
Raising the minimum wage destroys jobs, hurts the poor, keeps people on welfare, and encourages high school students to drop out of high school. It hurts exactly the workers that it intends to help – the poor, the unskilled, and the young
One survey indicated that 80% of Americans supported a higher minimum wage. Of those same respondents, less than half, approximately 46%, supported a higher minimum wage if it might reduce the number of jobs available for workers with limited skills
To get people out of poverty, we need a system that increases opportunities for low-skilled workers. Raising the minimum wage is the wrong solution for helping the poor, the unskilled, and the young
• This graph describes families in poverty and those eligible and ineligible for receiving benefits of a minimum wage increase in 1995
• Of everyone in the poverty level, only 25% of the people will benefit from the increase
Economics of Minimum Wage on Unemployment
The laws of supply and demand apply for the labor market just as they do for other markets. If the government raises the minimum wage (the price of labor), employers will demand fewer employees. At the same time, the supply of labor increases in response to a higher minimum wage. The final result is more workers looking for fewer jobs.
If we have a minimum wage increase above the equilibrium point, the amount of labor supplied is much greater than the amount of labor demanded
Effect on Employment
Effect on Welfare Recipients
Effect on Teenagers & High School Dropouts
Who Benefits from Minimum Wage Increases?
