What effect do minimum wage laws generally have on employment levels?

Minimum wage laws generally have the effect of decreasing the number of low-skill jobs. When a minimum wage is established above the equilibrium wage level, it can lead to a situation where employers may reduce the number of low-skill positions they offer. This is primarily because the higher wage increases labor costs for employers, leading them to either cut jobs, reduce hours, or seek out more skilled workers who provide greater productivity relative to their wage. As a result, the demand for low-skilled labor tends to decline, ultimately leading to a decrease in job availability in that segment of the labor market.

This effect can be particularly pronounced among younger workers or those with less experience, as employers may become hesitant to hire individuals whose productivity may not compensate for the higher wage mandated by the law. Thus, while the intention of minimum wage laws is to improve the standard of living for low-wage workers, it may inadvertently result in reduced employment opportunities for those very individuals.