Saturday, February 16, 2013

Minimum Wage and Unemployment

Proposals are being forwarded for debate with the notion that minimum wage should be increased. Most first year economics students learn that there is a correlation:  raising minimum wages increases the unemployment rate. Currently, unemployment rates are around 7.8%(U-3). Economic output is is paltry, yet we are to accept the concept of raising minimum wages?  Next, how does this help poor kids and minorities? It actually prices them out of the job market as employers consider hiring folks with more skills at a higher wage of pay. Or they redirect those dollars into purchasing equipment that would yield a similar output of labor.  What happens to the poor and minorities when this occurs? Dr. Thomas Sowell expands on the impact of raising minimum wages in this clip.

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