Final answer:
Increasing the minimum wage could lead to decreased employment for low-skilled workers, with higher labor costs prompting businesses to limit hiring. Powerful labor unions may also raise wages to a level that discourages hiring. Although wage laws meant to protect workers' incomes, they can also make wages "sticky downward," causing inflexibility in adjusting wages in response to economic conditions.
Step-by-step explanation:
An increase in the minimum wage could potentially hurt workers by reducing employment opportunities for low-skilled workers, as higher wage costs may lead employers to hire less or lay off some workers. This, in turn, might increase barriers to entry into the job market for less experienced individuals, limiting their opportunity to gain valuable on-the-job experience. Additionally, powerful labor unions can push wages up for their members, which might discourage businesses from hiring unionized workers due to increased labor costs.
Economists like Walter Williams and Thomas Sowell argue that minimum wage increases can lead to increased discrimination and hinder economic mobility for lower-skilled workers. Studies typically suggest that a 10% increase in the minimum wage may decrease the hiring of unskilled workers by 1 to 2%, although the impact can vary and is subject to debate. Moreover, while wage laws are designed to protect workers' incomes, they may inadvertently make wages "sticky downward", meaning it becomes legally difficult or impossible to reduce wages when economic conditions would otherwise warrant it.