Minimum Wage Effect

The minimum wage effect refers to the impact that setting a legal lowest hourly pay has on the economy and workers. When the minimum wage increases, it can boost income for low-wage workers, improving their living standards. However, it may also lead to higher costs for businesses, which might reduce hiring or cut jobs, especially for less-skilled workers. The overall effect depends on factors like the size of the increase and local economic conditions. Policymakers weigh these potential benefits and drawbacks when deciding on minimum wage adjustments.