How Minimum Wage Laws Affect Jobs and Pay

Minimum wage laws play a big role in how much workers get paid. These laws set the lowest amount that can be paid for work, which can change how many people are looking for jobs and how many jobs are available.

1. More Workers Wanting Jobs:

   • When minimum wages go up, more people want to find work.
   • For example, in 2023, the minimum wage in the U.S. is $7.25 per hour, but some states have raised it to$15 per hour.
   • This increase could bring in 3% more workers, especially in jobs that don't require special skills.

2. Fewer Jobs Available:

   • If companies have to pay higher wages, they might hire fewer people or cut back on workers' hours.
   • Studies show that for every 10% increase in the minimum wage, employment for low-skilled workers might drop by 1-3%.
   • A study by the Congressional Budget Office notes that raising the federal minimum wage to $15 could lead to about 1.4 million jobs disappearing.

3. Job Balance:

   • When the minimum wage is higher than what is considered a fair pay level (called the equilibrium wage), it can lead to more people looking for jobs than there are jobs available, which means more unemployment.
   • For instance, if the fair pay level is $10 and the minimum wage is set at$12, there will be more people wanting jobs than jobs available, leading to higher unemployment rates.

In short, minimum wage laws can change how the job market works. They can affect how many people want to work and how many jobs businesses are willing to offer.