A minimum wage raises unemployment

Minimum wages reduce employment in three ways. Firstly, higher labour costs increases the cost of producing goods or providing services. Employers pass those costs onto consumers in the form of higher prices, which leads to fewer consumer purchases of those goods. Reduced demand, then causes manufacturers and service suppliers to reduce supply, leading to layoffs or slowed job creation. ^[1] Secondly, higher labour costs prompt employers to accelerate automation. Raising the cost of human labour relative to machines and technology will encourage more employers to automate their workforces, leading to layoffs and reduced hiring. A 2014 study on the impacts of introducing a $15 an hour minimum wage in San Francisco estimated that the measure would lead to the loss of more than 15,000 jobs in the city. ^[2] Thirdly, as domestic wages increases, companies look to offshore operations to companies with lower labour costs to reduce overheads. This offshoring leads to supply chain relocation, reducing the number of domestic jobs.

[P1] Minimum wages increase the cost of labour. [P2] Employers employ strategies to recover the inflated costs. [P3] These strategies reduce the volume of jobs and increase unemployment. [P4] As more people become unemployed, more citizens end up in poverty.