In the example just seen, workers whose DMVP falls below the legislated $8.50 wage floor cannot be profitably employed; in the vast majority of cases (

), either these workers will be unable to locate jobs in this market, or else they will lose their present jobs. The new legislation obviously does not raise the wage of these workers, but in effect reduces it to zero. They thus become victims of the intervention in just as full a sense as the employers who are forced to curtail part of their business (

). The degree of the resulting unemployment, as can be seen easily from the graph on the previous page, increases as the imposed wage floor diverges further from the equilibrium (free-market) wage.

Over time, of course, market wages increase for reasons unrelated to minimum-wage legislation. We have seen that productivity and income levels tend to increase steadily in a free market (cf. p. 4.10:28), and to a degree such progress may be observed even in a market where some intervention is present but economic freedom still remains largely intact. In addition, inflation (discussed below) may generate rising wages as well as rising prices, creating an illusion of increasing prosperity. Some may mistakenly credit wage increases from these causes to minimum-wage laws. The real effect of such laws, however, is to create what economists call "structural unemployment"—a persistent level of unemployment (over and beyond "frictional" unemployment; cf. p. 4.6:27), unresponsive in the long run to monetary or fiscal policies.

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