Legal Minimum Wage: Benefits, Costs, and Unanswered Questions

An economic analysis is presented, in the GAO Review, Vol. 18, Issue 4, Fall 1983, of the effect of minimum wage rates and a proposed youth subminimum wage. It was suggested that a mandated rise in the legal minimum wage could lead to a rise in unemployment because employers could not afford higher labor costs. In addition, a proposed summer youth subminimum wage could adversely affect the wages of teenagers who are already employed at the existing minimum wage rate. Studies have not shown that the minimum wage alters the share of income going to the poor; however, since minimum wage earners are most often secondary earners in a household it is distributed across almost all levels of family income.