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The Detrimental Side Effects of Minimum Wage Laws
Author(s) -
Hovenga Claire,
Naik Devaja,
Block Walter E.
Publication year - 2013
Publication title -
business and society review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.524
H-Index - 21
eISSN - 1467-8594
pISSN - 0045-3609
DOI - 10.1111/basr.12018
Subject(s) - minimum wage , harm , productivity , legislation , unemployment , labour economics , economics , government (linguistics) , wage , revenue , demographic economics , law , economic growth , political science , linguistics , philosophy , accounting
The adverse effects of minimum wage legislation demonstrate how a government policy presumably intended to help people worst off in society can actually end up causing far more harm than good. In this case, the victims are unskilled laborers. By making it illegal for employers to pay unskilled workers wages equal to their marginal revenue productivity, it causes unemployment for all workers whose productivity happens to be below the minimum wage. It also widens the wage gap between whites and minorities because there are disproportionate numbers of unskilled and uneducated minorities compared with whites.