Minimum wage laws can hurt lowskilled workers from "summary" of Free to Choose by Milton Friedman
Milton Friedman argues that minimum wage laws, despite their good intentions, can actually have negative consequences for low-skilled workers. When the government sets a minimum wage above the market equilibrium, it distorts the balance between supply and demand for labor. Employers are forced to pay higher wages than they otherwise would, leading to fewer job opportunities for low-skilled workers. Friedman explains that employers respond to higher labor costs by cutting back on hiring, reducing work hours, or increasing prices to offset the higher wages. As a result, low-skilled workers may find it harder to secure employment, particularly those who lack the skills or experience to justify the mandated wage. This can exacerbate poverty and unemployment among the very individuals that minimum wage laws are intended to help. Furthermore, Friedman points out that not all low-skilled workers benefit from minimum wage laws. Those who manage to keep their jobs may see their hours reduced or face increased competition for limited positions. In some cases, employers may substitute higher-skilled workers for low-skilled workers in order to justify the higher wages. This can further disadvantage those who are already struggling to find work. Friedman argues that a more effective way to help low-skilled workers is through policies that promote economic growth and increase overall demand for labor. By creating a more competitive and flexible labor market, individuals are better able to find employment that matches their skills and abilities. This, in turn, leads to higher wages and greater opportunities for advancement.- Friedman suggests that while minimum wage laws may be well-intentioned, they can ultimately harm the very individuals they are meant to help. By understanding the unintended consequences of such policies, policymakers can work towards creating a more inclusive and prosperous economy for all individuals, particularly those at the lower end of the income spectrum.
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