Comprehensive Minimum Wage Economics Explorer
Explore the complex economics of minimum wage policy through three interactive simulations.
Each section demonstrates different aspects of how minimum wage laws affect businesses, workers, and employment decisions.
1. Business Impact Simulation: Car Wash Economics
Explore how changing labor costs impact a simple car wash business and the decisions owners must make.
Current Business Status: Manual Hand Wash
Number of Employees: 10
Hourly Wage per Employee: $10.00
Total Hourly Labor Cost: $100.00
Other Hourly Operating Costs: $250.00
Total Hourly Costs: $350.00
Hourly Revenue: $400.00
Hourly Profit/Loss: $50.00
2. Visual Barrier Simulation: Employment Obstacles
This visualization shows how minimum wage can act as a barrier between workers and employment opportunities.
3. Worker Profile Analysis: Cost-Effectiveness Impact
Businesses make hiring decisions based on the cost of labor and the value (productivity) that workers provide. When a minimum wage is set by law, it creates a floor below which hourly wages cannot fall.
The Actual Hourly Wage for a worker is the higher of their Hypothetical Market Wage and the Minimum Wage.
Cost-Effectiveness is a simplified measure showing the value a worker brings to the business per dollar spent on their wage (Productivity Value / Actual Hourly Wage). A higher number indicates greater cost-effectiveness.
Observe how changing the Minimum Wage affects the Actual Wage and Cost-Effectiveness of workers at different experience levels. Consider how this might influence a business's decisions about whom to hire, especially for entry-level positions.
Key Economic Insights
These simulations illustrate several important economic concepts:
- Unintended Consequences: Policies designed to help workers often lead to job losses or business closures.
- Automation Incentives: Higher labor costs can accelerate the adoption of automation technologies, causing further job losses.
- Employment Barriers: Minimum wage laws can prevent low-skilled workers from gaining employment and developing skills.
- Cost-Effectiveness: Employers evaluate workers based on the value they provide relative to their cost.
Recognizing these mechanisms is essential for understanding how free labor markets promote coordination, opportunity, and long-term prosperity.