According to some opinions, what impact does a minimum wage have on employment?

The assertion that a minimum wage leads to under-employment is rooted in the argument that when wages are set above the market equilibrium, employers may reduce the number of employees they hire or limit the hours of part-time positions to maintain their overall labor costs. This situation may occur because businesses may not be able to afford to hire as many workers at the higher wage rate, which could result in fewer job opportunities.

Additionally, under-employment may manifest as workers taking part-time positions or jobs that do not fully utilize their skills or qualifications, reflecting a misalignment between the available jobs and the labor force's capacity. This perspective hinges on economic theories suggesting that if the cost of labor increases due to a minimum wage, employers might opt for automation or reduce their workforce instead of hiring new employees.

While there are differing opinions on the impact of minimum wage laws, some economists and labor market analyses indicate that such policies can potentially create inefficiencies in the job market, contributing to increased rates of under-employment.