Drowning the poor in excessive wages: the problems of the minimum wage law
Abstract
Purpose
The purpose of this paper is to demonstrate that the minimum wage law is deleterious to the unskilled, to the young and to members of minority groups.
Design/methodology/approach
The main method used in this paper is the logical application of basic supply and demand economic analysis.
Findings
The authors found that when a minimum wage of any given level is imposed, those with productivities below that level are at great risk of unemployment. For example, with a minimum wage of $10 per hour, those who can only produce at the rate of $1‐$7, $8, or $9 per hour are likely to become unemployed. Similarly, if the level is raised to, say, $100, then even people with productivity levels of $8 or $90 per hour will lose their jobs.
Research limitations/implications
More effort should be made to ascertain who it is that gains from this law, if it is not the poor and unskilled. Attention should be focused on labor unions in this regard.
Practical implications
The practical implication of this research is that the minimum wage should be repealed.
Social implications
Present public attitudes, however, overwhelmingly support this legislative enactment. But this is based on economic illiteracy. The public needs to be educated in basic economics.
Originality/value
This paper, if its implications are implemented, will have great value for all those who wish the unemployment rate to be radically reduced.
Keywords
Citation
Schuldt, R., Woodall, D. and Block, W.E. (2012), "Drowning the poor in excessive wages: the problems of the minimum wage law", Humanomics, Vol. 28 No. 4, pp. 258-269. https://doi.org/10.1108/08288661211277326
Publisher
:Emerald Group Publishing Limited
Copyright © 2012, Emerald Group Publishing Limited