Increasing the minimum wage reduces employment among low-wage workers
Minimum wage increases are intended to raise the earnings of low-paid workers, but the result of increasing the minimum wage is not always what is intended in sense of the effect on employment.
The claim here is that increasing a legally mandated minimum wage causes affected employers to reduce employment, hours, or hiring among low-wage workers. This depends on various factors such as the size of the wage increase, the workers, the industry(ies) affected, and the economic conditions in which the policy is introduced.
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Research on the impact of minimum wage increases on employment remains a subject of debate, with no universal consensus among economists regarding the overall effects. [1] Some studies indicate that minimum wage increases lead to negative employment outcomes, particularly for the least-skilled worker groups, while evidence for positive employment effects is considered limited or unconvincing. [1]
Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research
NBER
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Minimum Wages and Employment: A Review…
Working Paper 12663
DOI 10.3386/w12663
Issue Date November 2006
Revision Date January 2007
We review the burgeoning literature on the employment effects of minimum wages - in the United States and other countries - that was spurred by the new minimum wage research beginning in the early 1990s. Our review indicates that there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage. However, the oft-stated assertion that recent research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect. A sizable majority of the studies surveyed in this mono
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