Problems With Minimum Wage Analysis

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The major reason against raising the minimum wage rate is that businesses are unwilling to overcompensate an individual if they have not contributed that amount of value to the company. In the article “Problems With Minimum Wage” author Jason Gillikin addresses this topic. “If an employer needs someone to perform odd jobs, and he values the work at $2 per hour, he will not hire a person if the minimum wage is $7 per hour, thus keeping unemployment in low-wage brackets higher than it would otherwise be” (Gillikin). In order to compensate for the increased cost of paying workers more than what they are contributing, a company may chooses to reduce the amount of total hours worked for each individual in an effort to reach an efficient wage expense.
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