Increases in the government-imposed minimum wage tend to increase unemployment among unskilled workers.

Question

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When the minimum wage is increased, employers may need to cut costs to accommodate the higher wages. This can lead to a reduction in the number of jobs available for unskilled workers, as businesses hire fewer workers or switch to more skilled and experienced workers who are more productive and can justify earning the higher wage. Additionally, businesses may replace workers with technology or automation to cut costs further. Therefore, an increase in the minimum wage can result in higher unemployment among unskilled workers.

Increases in the Government-Imposed Minimum Wage Tend to Increase Unemployment