Minimum wages: issues and evidence

by Finis Welch

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Minimum wage laws reduce employment, particularly among those whose wages are lowest. The law tells workers that unless they can find jobs at or above the specified minimum, they cannot work. Teenagers are not the only ones affected. The low-wage, low-productivity population is widely dispersed and includes the aged, part-time workers, and females. This paper examines some of the demographic characteristics of the low-wage labor market and discusses the most obvious questions of effects of the minimum wage law, including inferences for total employment and effects of incomplete coverage. The author shows that minimum wages are perverse, transferring income from some have-nots to other have-nots. He states the idea of minimum wages was a misguided idea in 1938, and after 40 years evidence of adversity, its time has passed.

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