Why does minimum wage help or hurt unskilled workers?
On One Hand: Takes Away JobsWhen there is a minimum wage or when one is raised, many businesses will not be able to afford the extra expense and may eliminate jobs as a result. Also, if it becomes too expensive to conduct business where minimum wage is in place or is set too high, businesses may choose to relocate. The fewer jobs there are, the harder it will be for unskilled workers, in particular, to get a job.On the Other: People Want Minimum Wage StandardsPsychologically, people feel better if they have a minimum wage. Minimum wage, some workers believe, keeps their employers from exploiting them. A minimum wage allows workers to develop a measure of trust with their employer.Bottom LineWhen a minimum wage is set or when one is raised, prices go up to reflect this. Therefore, the unskilled laborer making minimum wage is no better off than before, since the higher prices negate the wage increase.
