Minimum Wage Economics Essay Questions

Second Claim Paragraph


Another reason the minimum wage [should/should not] be legally enforced is [that/the fact that] [provide your second claim for or against the legal enforcement of the minimum wage.]



Another reason the minimum wage [should/should not] be legally enforced is [that/the fact that] [provide your second claim for or against the legal enforcement of the minimum wage.]




  • Having a legally required minimum wage assures that the poorest and most vulnerable class of workers can meet their basic needs.
  • The minimum wage encourages more spending by the poorest class and stimulates economic growth.
  • A standard minimum wage is a human right.
  • A minimum wage improves both the quality and efficiency of labor.
  • Implementing a minimum wage can decrease government spending on supportive programs for low-income households. 



  • Businesses should be able to set their wages independently of government controls.
  • A minimum wage can cause a surplus in labor and create more unemployment.
  • The minimum wage is unfair to small or start-up companies and encourages the growth of already-big companies.
  • A minimum wage can prevent individuals from pursuing higher education and therefore can decrease the quality of an economy's human capital. 
 Reference Page on the Minimum Wage Principle


United States Department of Labor Information on the Minimum Wage


U.C. Davis Center for Poverty Research: History of the Minimum Wage

Minimum Wages Essays

The Minimum Wage is a popular topic in exams. It is a good example of how theory can be applied to the real world.

Does A Minimum Wage help Reduce Poverty?

A minimum wage increases the wages of the low paid, but does it actually reduce relative poverty? This is a matter of debate because the effects of a minimum wage may not be felt by the poorest.

How a minimum wage reduces poverty
  1. Increases wages of lowest pay. This reduces relative poverty of the low paid. (It also perhaps, reduces need for goverment benefits, such as, income support
  2. Counteracts Monopsony Power. In some cases a minimum wage can actually reduce unemployment. See diagram
Why a Minimum Wage May not Reduce Poverty

  1. The poorest do not work at all. The poorest are on government benefits; therefore, they do not benefit from a minimum wage.
  2. Many workers receiving the minimum wage are second income earners or students. Therefore, the benefits of a minimum wage can often accrue to middle class families.
  3. Minimum wages can lead to a fall in employment. Unemployment can be the biggest cause of poverty. See: Disadvantages of Minimum wages
  4. May increase Black Market Economy. Minimum wage legislation may encourage people to work on the black market, and therefore, avoid all government legislation.
  5. Evidence from America suggest effect is limited. See this paper by James Sherk: Raising minimum wage does not reduce poverty
"The obvious policy implication is that minimum wage laws cannot be justified as a poverty reducing device."

- Dr R.Vedder and Dr E. Galloway [1]

See Essay: Does a Minimum Wage Reduce Poverty?

Does A Minimum Wage Cause Unemployment?

For example, the classical analysis of minimum wages suggests that a minimum wage above the equilibrium will cause unemployment.

However, in practice, we see that increasing the National Minimum Wage may not lead to unemployment. For example, in the UK the minimum wage has increased from £3.30 in 1997 to £5.35; however, during this period unemployment has fallen.

There are various economic reasons to explain why this might occur. The most convincing reasons in the UK include:

  • Economic Growth
  • Monopsony Power of Employers
  • Increasing Productivity

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