As a class we have been studying the principle agent problem and concept of employee shirking. An article written by Esme Deprez in Bloomberg outlines the US minimum wage increase in 2009. It suggests that the proposed increase came at a poor time for the US economy due to the recession.
A primary concern of raising the minimum wage is job losses by small businesses that can no longer afford to hire as many workers. Is this type of unemployment similar to structural unemployment caused when employers pay efficiency or above market clearing wages? Have businesses compensated for wage increases by finding cost-effective substitutes such as machinery or technology to replace labor?
A secondary concern of raising the minimum wage is the increased likelihood of shirking by employees at the minimum wage? If an employee knows that any job they receive will pay them the same or possibly more than what they currently earn are they really incentivized to perform optimally?