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Explain why U.S. minimum-wage laws have historically had only a small impact on employment? Use a...

Explain why U.S. minimum-wage laws have historically had only a small impact on employment? Use a graph to explain your answer.

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Answer #1

The minimum wage rate has been decided at $ 7.25. It is a federally determined minimum wage rate. But the reality is that there are few states where we can find that the minimum wage is higher than the federally determined wage rate.

Further, the market-determined wage rate is higher than the federally determined minimum wage rate. Thus, workers tend to get a higher wage rate. Thus, the minimum wage rate hardly affects the living standard of people. there are few regions where the minimum wage is close to the market-determined wage rate, thus in such region, the minimum wage rate can affect living standards positively.

Following is the diagram:

Here, minimum wage is lower than the equilibrium determined rate, thus it would not affect the living standard of people.

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