Unemployment and the Minimum Wage
19th September 2013
Don Boudreaux, a Real Economist, provides some inconvenient truth.
While standard economic theory doesn’t predict that a higher minimum wage will necessarily reduce the number of hours of paid work by low-skilled workers – employers, for example, might adjust to the higher minimum wage exclusively by working all of their low-skilled workers harder – reduced employment for low-skilled workers remains among the most plausible consequences of the adjustments that employers inevitably will make to a rise in the minimum wage.
W.S. Siebert, an economist at the University of Birmingham, has a very nice article in the Summer 2013 issue of Economic Affairs reviewing much recent research on the employment effects of minimum-wage legislation. This research, in toto, pretty convincingly shows that higher minimum wages promote higher unemployment among low-skilled workers. Here’s a recent blog post that Prof. Siebert wrote to summarize his article’s findings.