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- Dec 20, 2012
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Here's what happens when the minimum wage is increased: It Depends.
For some industries/occupations that have few if any min wage employees: no effect.
For industries that have a significant number of min wage workers, the cost per unit of Labor will increase but total labor cost could go up, down, or stay the same, largely dependent on changes in productivity.
The number of employed could go up, down, or stay the same depending on demographics, industry demand, and labor supply.
If the increase is still below equilibrium, then there will be no effect.
If the increase is significantly above equilibrium, then there will be a surplus of labor (unemployment), if the demand and supply curves don't change. But they might.
If one area increases and an adjacent area does not, then we could see an increase in employment with the increased wage.
And that's all off the top of my head. There could be secondary effects if those who were making barely above minimum wage also receive a pay bump. And with enough variations among occupations, industries, demographics, supply, demand, etc, we could see all the above effects at one level or another.
In short.....Anyone who tells you what will happen for sure with a change in the minimum wage is talking out of his or her posterior. There are too many variables and no way to predict except in the broadest terms, and even that will be with a large degree of uncertainty.
For some industries/occupations that have few if any min wage employees: no effect.
For industries that have a significant number of min wage workers, the cost per unit of Labor will increase but total labor cost could go up, down, or stay the same, largely dependent on changes in productivity.
The number of employed could go up, down, or stay the same depending on demographics, industry demand, and labor supply.
If the increase is still below equilibrium, then there will be no effect.
If the increase is significantly above equilibrium, then there will be a surplus of labor (unemployment), if the demand and supply curves don't change. But they might.
If one area increases and an adjacent area does not, then we could see an increase in employment with the increased wage.
And that's all off the top of my head. There could be secondary effects if those who were making barely above minimum wage also receive a pay bump. And with enough variations among occupations, industries, demographics, supply, demand, etc, we could see all the above effects at one level or another.
In short.....Anyone who tells you what will happen for sure with a change in the minimum wage is talking out of his or her posterior. There are too many variables and no way to predict except in the broadest terms, and even that will be with a large degree of uncertainty.