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WEW-066

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Microeconomics Question from Walter E. Williams:Edit

"If the minimum wage law is eliminated, it will only shift the burden of unemployment from sons to fathers." Evaluate.

AnswerEdit

False. Lifting the minimum wage law will eliminate the price floor placed on wages in the labor market. The minimum wage is the root cause of the observed unemployment. The elimination of the price floor will allow the market to equilibrate supply and demand for various jobs and skill levels. It is true that the wage paid to the younger less experienced generations (sons) will be lower than the minimum wage, while the wage paid the fathers (more experienced workers) will be higher than the minimum wage. It is false to say that the market would only adjust away from less skilled labor to more skilled labor while maintaining the same levels of unemployment that was originally caused by government intervention.

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