| Chapter 12 Outline |
| VI. UNEMPLOYMENT AND THE MINIMUM WAGE
|
| A. Effect of the Minimum Wage |
| 1. Increasing the wage creates a surplus of labor. |
| a. Increasing the minimum wage causes the quantity of labor that firms are willing to hire to decrease and the quantity of labor willing to work to
increase. |
| 2. Only those workers who remain employed receive higher wages. |
| a. Over half of the low-wage workers in the United States are members of households with above average family incomes. Thus, only a part of the increase in income caused by the minimum wage benefits low-income
families. |
| 3. Because low-skill workers are laid off as the minimum wage increases, many low-income families will be adversely affected. |
| a. Teenagers are among those most adversely affected by the minimum
wage. |
| 4. The structurally unemployed may be adversely affected because the minimum wage provides employers less incentive to offer on-the-job training. |
| 5. The excess supply of labor generated by the minimum wage provides employers with the chance to discriminate if they so choose. |
| 6. Society will lose because the nation's output of goods and services will fall. |