Unemployment Essay Example | Topics and Well Written Essays - 750 words

Unemployment - Essay Example The premise of a government-imposed minimum wage is that the common good has been served by the law; the government has served its purpose. Some, such as many business owners, disagree. They claim that the extra costs force them to raise prices (inflation) and lay-off workers (unemployment). There is ample evidence that supports both the pro and con positions on the subject. Economists are gradually coming to the conclusion, though, that the minimum wage law does cause inflation or unemployment, the latter of which this paper will further examine. As a result of the minimum wage law, some employers do, in fact pay out more to their employees on the front-end but evidence indicates the increased expenditures to businesses are usually offset by associated benefits. For example, employees who earn a salary which allows their families to make ends meet are less likely to secure other employment. This reduces the employer’s employee turnover rate thus reducing additional recruitment and training costs (Holmes & Zellner, 2004, pp. 76-77). It also results in a reduction of absenteeism while raising morale thus employee productivity. The opponent’s contention that the law puts a financial burden on them causing the lay-off of workers is weak at best. According to Alan Blinder, former Federal Reserve vice chairman, â€Å"The evidence appears to be against the simple-minded theory that a modest increase in the minimum wage causes substantial job loss† (Chipman, 2006). A 1998 study conducted by the Economic Policy I nstitute found no loss of employment in connection with the minimum wage increase in 1996-97. Furthermore, subsequent to that increase, the low-end labor market experienced lower poverty rates, an increase in family income and lower levels of unemployment (Bernstein & Schmitt, 1998). Many leading economists support the minimum