The US minimum wage, at almost 75 years old, remains the topic of many academic studies and much policy debate despite the fact that only about 5% of hourly employees are currently paid at or below the federal minimum. There are many possible and interesting economic effects of the minimum wage. The issue that has received by far the most attention is whether increasing the minimum wage has a negative effect on employment, and if so, for whom and by how much. Economists first approach this question through the basic theory of a perfectly competitive labor market where all workers are identical and perfectly interchangeable and all firms are also identical and perfectly interchangeable. To think about the real world outcomes, take for example 1950 when the minimum wage increased by 88%, and the most recent and the most recent increase in the federal minimum wage when it increased from $6.55 to $7.25 -- a jump of 11%. In 1950, national unemployment fell; in 2011, it rose.

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