Unemployment and the Minimum Wage

Employees

Employers

The current minimum wage is not a livable wage in most parts of the world. Even if the wages are higher in some states, the cost of living is more often than not higher as well. Since many low-wage jobs are part-time, the low wage isn't the only issue, it's fewer hours. With the cost of living not being equal to the minimum wage, and the hours not being enough to make ends meet, many low-wage workers are forced to get second jobs.

With an increase in the minimum wage, employers will be forced to not only pay those who earn minimum more, but also pay those who earn more than minimum more in order to maintain the differential in pay for different positions. in order to maintain production and revenue, employers may have to let employees go, and put the money saved by not having as many employees into other aspects of the company.

This pie chart shows the reasons why these multiple jobholders have more than one job. Most of the people asked wanted to earn more money, for reasons unspecified, so it is possible some of the people asked also belong in the "Meet regular expenses..." category.

This chart shows the percentages of the workforce that hold FT/PT jobs and PT/PT jobs. We may think that people who have multiple jobs would work part time for both of them, but that isn't correct when you compare with the entire labor force.

What factors influence people to seek second jobs?

This graph also shows the number of multiple jobholders and the types of jobs they hold, but also shows the trends these types of jobs have followed over the past seven years.

People seeking secondary employment more often than not are doing so for one reason: to make more money. The exception being the elderly who sometimes work simply because they enjoy it. If searching for another job, many will take the following into account in order to decide if the second job is worth the time they'd be giving to it:

• will the wage of the second job be greater than or equal to the pay of the first job?
• will the hours be worth the hours they had of leisure before getting the job?

With an increase in minimum wage, the wage necessary to induce someone to get second job changes, either increasing or decreasing it depending on the needs of th person.

Conclusion

Works Cited

Question

Dolan, Ed. "EconoMonitor : Ed Dolan's Econ Blog » Multiple Jobholders: Another Sign of a Job Market in Crisis?" Ed Dolans Econ Blog RSS 092. N.p., 13 Mar. 2014. Web. <http://www.economonitor.com/dolanecon/2014/03/13/multiple-jobholders-another-sign-of-a-job-market-in-crisis/>.

Pender, Kathleen. "Minimum Wage Hike Won't Help Many Workers in S.F." SFGate. N.p., 14 June 2014. Web. <http://www.sfgate.com/business/networth/article/Minimum-wage-hike-won-t-help-many-workers-in-S-F-5553011.php>.

Shishko, and Rostker. "The Economics of Multiple Job Holding." (n.d.): n. pag. 9 Mar. 2001. Web. <http://www.rand.org/content/dam/rand/pubs/monographs/MG265/images/webS0159.pdf>.

States, Congress Of The United, and Congressional Budget Office. "The Effects of a Minimum Wage Increase on Employment and Family Income." CBO (n.d.): n. pag. Feb. 2014. Web. <http://www.cbo.gov/sites/default/files/cbofiles/attachments/44995-MinimumWage.pdf>.

Worstall, Tim. "Youth Unemployment Shows The Effects Of a Minimum Wage That Is Too High." Forbes. Forbes Magazine, 02 Mar. 2014. Web. <http://www.forbes.com/sites/timworstall/2014/03/02/youth-unemployment-shows-the-effects-of-a-minimum-wage-that-is-too-high/>.

Does the low minimum wage have any correlation with the lack of jobs? Could increasing the minimum lead to further unemployment?

Many people who work minimum wage jobs are forced to work multiple jobs in order to support themselves and their families. It may be possible that this is contributing to the lack of available jobs.

In the end, I was unable to find a correlation between the low minimum wage and unemployment due to people holding multiple jobs. There is definitely a relationship between the minimum wage and unemployment, but not due purely to people holding multiple jobs. The people who hold multiple jobs are not the problem, there are many more aspects that go into low wages. If minimum wage did increase, those who had multiple jobs would more than likely keep their jobs, as long as they didn't get fired due to the employers' need to save money.

Why does an increase in minimum wage lead to an increase in unemployment?

It is known that an increased minimum wage could possibly lead to higher unemployment.

There are two main reasons an increase in minimum wage leads to an increase in unemployment:

• higher wages increase the cost to employers of producing goods and services, which increases prices and decreases consumption by customers; this is called the scale effect and affects both high and low-wage jobs
• higher wages also raise the cost of workers in relation to other inputs employers need, such as technology and machinery; called the substitution effect and helps high-wage workers, but hurts low-wage workers

Unemployment and the Minimum Wage