How does a minimum wage requirement impact an economy?
If a minimum wage is set reasonably low it can be alright. It provides what could be described as a standard of comparison. The problem is that if you raise the minimum wage high enough, corporations may decide that it’s cheaper not to employ people or to employ fewer people, which means that it becomes difficult for new people to find a job. Certainly, you have younger people, for example, college students, who don’t have as much experience or knowledge and therefore have to price themselves lower in the market in order to be find employment. And so a minimum wage, in some ways helps the guys who are already employed, but hurts the guys who are looking for a job. Author, Commentator and President of The King's College, Dinesh D'Souza |
A minimum wage law hurts the poorest and least skilled the most because its deprives them of employment opportunities. If a young person, for example, doesn't have any skills to justify being paid the minimum wage rate, he or she will have a difficult time landing a first job. And when it is more difficult to find a first job it will be more difficult to find a second, third or fourth job, which traps a person in poverty. Economist, investment advisor, author and commentator, Peter Schiff |
A minimum wage requirement increases unemployment because it simply means that people whose employment value isn’t worth the minimum wage won’t be employed. If a certain job isn’t worth the going minimum wage rate, then an established business simply won’t hire somebody to work. Unfortunately, those who most need low paying, low skilled jobs and are able and willing to work for less than the minimum wage - the young, uneducated and poor - are those who suffer the most. President of the Center for Urban Renewal and Education, Star Parker |
Minimum wage laws make hiring workers more expensive and price some workers out of employment. People misunderstand the labor market, worry about those who aren't making a living wage and therefore support high minimum wages. But overwhelmingly, those working for minimum wage are teenagers and those just entering the workforce. These first jobs may be low-paying, but they are critical for skill building. Raising the minimum wage makes it less likely that companies are going to hire those who really need that critical first job -- which is one of the reasons our teen unemployment rate is so high today. It's far worse to have no job than to have one that pays relatively little. The inability to get a first job and have that skill building experience will be a drag on the economy for years to come. Independent Women's Forum director and Goldwater Institute senior fellow, Carrie Lukas |
The standard economic treatment of this issue has it that minimum wages cause unemployment of low-skill workers. The argument is that if employers can’t get more from a worker than the minimum wage they’re required by the state to pay, then they won’t employ them. Strange then that virtually all developed nations have a minimum wage. An alternative to the standard economic view is that if there is a tendency for minimum wages to cause unemployment amongst the unskilled, then this provides a powerful incentive for them to seek to raise their skills through education (which is often facilitated by the state). Looked at from this perspective, minimum wages do not cause a rise in the unemployment rate. What is more, they have the advantage that they raise the skill levels and the earning capacity of previously unskilled workers. It has also been argued that minimum wages call forth more individuals to join the workforce and thus result in higher levels of national output. Professor & Head of QUT's School of Economics and Finance, Tim Robinson |
The impact that a minimum wage requirement has on an economy depends on how high it is set, but in general, while a minimum wage requirement might raise the wages of certain unskilled workers, because these requirements don’t come with any additional revenues for the businesses paying them, they also tend to destroy some jobs at the lower end of the economic spectrum. Contributing editor of City Journal and Manhattan Institute senior fellow, Steven Malanga |
It costs jobs. Particularly for part time workers, or interns, the minimum wage reduces flexibility for businesses to hire. For further elaboration, see NTU's documents, Minimum Wage Hurts and Vice President of the National Taxpayers Union, Pete Sepp |
For people who keep their jobs, they have higher wages, but they typically end up with lower benefits because the employers try to economize on having been required to pay higher wages by cutting the non-wage compensation of the people who stay employed. For the people who either can't stay employed or are not employed with a higher minimum wage - those are usually lower-level workers or new workers, new people in the labor force - in their case the unemployment rate is up. I can't find anything good to say about the higher minimum wage. It's an illusion to believe that we can significantly raise average wages by putting a minimum on them. But that's been the rational behind the minimum wage raise for a long period of time and it's just wrong. Cato Institute Chairman Emeritus and Senior Economist, William Niskanen |
If it's fair and equitable, that's fine, but I think we still have to be very cognizant that from a small business perspective, if every time I hire an employee, I have to pay this amount of wages it can be a Catch 22. I want to be an entrepreneur and I want to employ people, but if you're telling me that I have to pay $10 an hour in order for that person to work for me and be above board by paying my taxes and the rest of the mandates which are imposed on a business owner, it can be a stranglehold on businesses and business owners. All they are trying to do is operate fairly and make a contribution to society and in the long run if I can't hire anybody at that price, then the minimum wage doesn't mean much. Entrepreneur and Chairman of The Frederick Douglass Foundation, Timothy Johnson |
As an undergraduate taking economics I learned that raising the minimum wage led to increased unemployment. However, David Card and Alan Krueger have done work showing that the minimum wage increase in the 1990s had no disemployment effects. Bruce Caldwell has a really excellent discussion of this issue on pages 385 top 386 of his book Hayek’s Challenge, which I recommend. Editor of FutureOfCapitalism.com and author of "Samuel Adams: A Life", Ira Stoll |
It creates unemployment among those whose labor has sub-minimum market value. President of H. C. Wainwright and Company, Economics, David Ranson |
The minimum wage is a useful way of assuring that prosperity is more widely shared. There are no reputable studies proving that the minimum wage harms either employment or economic growth. Author, commentator and lead Bloomberg View columnist, Jonathan Alter |