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Some people ask--what's the difference between wage increases over time as the economy grows (associated with increases in employment) and legislated wage increases where employment is alleged to fall? Why isn't a MW consistent with more employment?
When workers are more productive (either because they have higher skills or are working with more capital), the demand for labor increases. This pushes wages up and draws more workers into the work force as we move along the supply curve.
An increase in the minimum wage also draws more workers into the labor force at least at first as we move along the supply curve. But because there is no increase in productivity, there is a reduction in the amount of labor that employers want to use at the new higher wage.
The result Is a decrease in opportunities although those workers who keep working do get a raise. But it comes at the expense of the workers with the least skills who will either be laid off or not hired in the first place. The minimum wage is cruel.
