The Detrimental Side Effects of Minimum Wage Laws

25 Pages Posted: 5 Dec 2013

See all articles by Claire Hovenga

Claire Hovenga

Loyola University New Orleans - Joseph A. Butt, S.J. College of Business

Devaja Naik

Loyola University New Orleans - Joseph A. Butt, S.J. College of Business

Walter E. Block

Loyola University New Orleans - Joseph A. Butt, S.J. College of Business

Date Written: Winter 2013

Abstract

The adverse effects of minimum wage legislation demonstrate how a government policy presumably intended to help people worst off in society can actually end up causing far more harm than good. In this case, the victims are unskilled laborers. By making it illegal for employers to pay unskilled workers wages equal to their marginal revenue productivity, it causes unemployment for all workers whose productivity happens to be below the minimum wage. It also widens the wage gap between whites and minorities because there are disproportionate numbers of unskilled and uneducated minorities compared with whites.

Suggested Citation

Hovenga, Claire and Naik, Devaja and Block, Walter E., The Detrimental Side Effects of Minimum Wage Laws (Winter 2013). Business and Society Review, Vol. 118, Issue 4, pp. 463-487, 2013. Available at SSRN: https://ssrn.com/abstract=2363713 or http://dx.doi.org/10.1111/basr.12018

Claire Hovenga (Contact Author)

Loyola University New Orleans - Joseph A. Butt, S.J. College of Business ( email )

6363 St. Charles Avenue
New Orleans, LA 70118
United States

Devaja Naik

Loyola University New Orleans - Joseph A. Butt, S.J. College of Business ( email )

6363 St. Charles Avenue
New Orleans, LA 70118
United States

Walter E. Block

Loyola University New Orleans - Joseph A. Butt, S.J. College of Business ( email )

6363 St. Charles Avenue
Box 15, Miller 321
New Orleans, LA 70118
United States
(504) 864-7944 (Phone)
(504) 864-7970 (Fax)

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