[Don Boudreaux] points out that minimum wage hikes may sound good in on their face, but in reality they result in job loss because they increase the cost of labor, making low-skilled employees more expensive for employers to hire…Wage hikes disproportionately hurt marginalized groups with the least experience. Inner-city students, immigrants, and other workers on the lower rungs of the economic ladder are deemed most expendable when employers are forced to reduce job opportunities. (para. 2-3)
Thomas Sowell (2015) echoes this when saying,
Unfortunately, the real minimum wage is always zero, regardless of the laws, and that is the wage that many workers receive in the wake of the creation or escalation of a government-mandated minimum wage, because they either lose their jobs or fail to find jobs when they enter the labor force. (pp. 220-221)
While some argue these points, even saying the minimum wage helps to encourage job growth (Hanauer, 2016). These sentiments further show how economics is not simply a matter of money. While the general public has a mindset of “more money means a higher standard of living.” This is untrue, however, because it assumes those people will keep their jobs. Sowell (2015) cites that in countries where there is no minimum wage law, the unemployment rates tend to be relatively low. Minimum wage is not only a matter of money, but also a matter of cost, and this high cost may and does lead to more unemployment, an example o...
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...f the economic consequences these fixes will often make what they were trying to fix worse than it was before. The minimum wage was shown by several studies to increase unemployment rates (Sowell, 2015). Government subsidization put people in such a position that some felt they did not feel the need to find employment as quickly. And finally, a shorter work week proved also to be another source of higher unemployment rates as well, as the employers were unable to continue to pay more employees at the same rate as they had paid fewer employees. Likewise, job security makes it so difficult to fire employees as to make it difficult to hire them in the first place. Gaining a better economic understanding of the consequences of such popular fixes as the above can greatly help in trying to limit them in the future, for future generations as well as the present generation.
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