The Effects Of Minimum Wage On Jobs Essay

The Effects Of Minimum Wage On Jobs Essay

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Increasing the minimum wage has always been a very controversial topic because many people are unsure of how it will effect society. One of the main concerns is its effect on jobs. According to most economists there is no “free lunch” meaning something has to be done to pay for the cost of increasing wages (Wilson). Most companies will not just take the hit and accept reduced profits. Instead companies will find other ways to makeup for their loss like decreasing the amount of employees. With information limited to two opposing opinionated articles, a novice can conjecture increasing minimum wage does not significantly decrease the amount of jobs.
The first article, “The Negative Effects of Minimum Wage Laws” by Mark Wilson is against increasing minimum wage. He claims that an increase in minimum wage reduces jobs, but he does a terrible job at supporting his claim.
Wilson’s approach of analyzing minimum wage solely through the use of numbers, oversimplifies the economy and makes his conclusion less persuasive. He first analyzes what an increase in minimum wage will do by establishing the elasticity of the labor market (elasticity determines who bears the burden of an increase in minimum wage). He supports the traditional economist views that jobs are more of a necessity making them inelastic. This means that the employees bear the burden and there are job losses. The problem with this approach is that it depends on him being correct about the elasticity of minimum wage. If minimum wage is elastic then his findings would be completely different. Currently there are many economists who have changed their mind and now believe the labor market its elastic. Wilson ignored this fact and computed the data to find that...

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...s Doucouliagos and T.D. Stanley (2009) and by Dale Belman and Paul Wolfson (2014) find minimum wage has little or no impact on employment (Christman).
The use of controls among the new minimum wage studies and meta-studies by credible economists is very persuasive. All of them point to an obvious consensus that increasing the minimum wage will not decrease jobs. Thinking about companies as individuals instead of generalizing them and making it into numbers also makes more sense to me. It shows a deeper understanding of the complexities of the economy. Overall I think Christman’s sophisticated argument for increasing minimum wage was more persuasive than Wilson’s. As a novice it is difficult to make an in-depth assessment of all the studies accuracy but judging from what is known it seems increasing minimum wage does not significantly decrease the amount of jobs.

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