Page "Minimum wage" Paragraph 21

If a higher minimum wage increases the wage rates of unskilled workers above the level that would be established by market forces, the quantity of unskilled workers employed will fall.

The minimum wage will price the services of the least productive ( and therefore lowest-wage ) workers out of the market.

...

The direct results of minimum wage legislation are clearly mixed.

Some workers, most likely those whose previous wages were closest to the minimum, will enjoy higher wages.

This is known as the " ripple effect ".

The ripple effect shows that when you increase the minimum wage the wages of all others will consequently increase due the need for relativity.

( Formby, J., Bishop, J., & Kim, H .. ( 2010 ).

The Redistributive Effects and Cost-Effectiveness of Increasing the Federal Minimum Wage.

Public Finance Review, 38 ( 5 ), 585.

Retrieved April 18, 2012, from ABI / INFORM Global.

( Document ID: 2140268271 ).

) Others, particularly those with the lowest prelegislation wage rates, will be unable to find work.

They will be pushed into the ranks of the unemployed or out of the labor force.

Some argue that by increasing the federal minimum wage, however, the economy will be adversely affected due to small businesses not being able to keep up with the need to subsequently increase all workers wages.

( Belman, D., & Wolfson, P .. ( 2010 ).

The Effect of Legislated Minimum Wage Increases on Employment and Hours: A Dynamic Analysis.

Labour, 24 ( 1 ), 1 – 25.

Retrieved April 18, 2012, from ABI / INFORM Global.

( Document ID: 1960232931 ).