below it. About 1.5% of hourly workers in the U.S. are paid the minimum wage. In other words, the vast

majority of the U.S. labor force has its wages determined in the labor market, not as a result of the government

price floor. However, for workers with low skills and little experience, like those without a high school diploma

or teenagers, the minimum wage is quite important. In many cities, the federal minimum wage is apparently

below the market price for unskilled labor, because employers offer more than the minimum wage to checkout

clerks and other low-skill workers without any government prodding.

Economists have attempted to estimate how much the minimum wage reduces the quantity demanded of low-

skill labor. A typical result of such studies is that a 10% increase in the minimum wage would decrease the

hiring of unskilled workers by 1 to 2%, which seems a relatively small reduction. In fact, some studies have
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