Minimum Wage Dynamics and Employment Effects

Models the feedback loops between minimum wage levels, employment, consumer spending, and business formation.

Key findings

• Moderate increases (up to 60% of median wage) show net positive employment effects through spending multipliers.
• The spending-demand-employment loop dominates the cost-displacement loop up to a threshold wage level.
• Phase-in periods longer than 3 years allow business adaptation that prevents the displacement effect from materializing.