Why is raising the minimum wage generally ineffective?
A) Most employers purchase labor on the black market,where the binding price floor is not present.
B) The minimum wage is an amount suggested by the government,and employers are under no obligation to pay their employees the suggested basic wage.
C) The minimum wage is usually set below the prevailing equilibrium wage and is frequently nonbinding.
D) Employees are often unconcerned with their wages and care more about the benefits that come with the job.
E) Most employees who hold low-wage jobs work in the black market,where the binding price floor doesn't exist.

Question

Quizplus · Accepted Answer

The minimum wage is generally ineffective because it is often set below the prevailing equilibrium wage, meaning that it is already a non-binding price floor. This means that employers are already paying their employees more than the minimum wage and increasing it would have little to no effect on their wages. Additionally, some employers may choose to cut back on hiring or reduce hours to compensate for the increased labor costs.

Why Is Raising the Minimum Wage Generally Ineffective