In minimum wage controversy, usually involving political hacks, liberals pretend to have concern for the working poor, which is a well-meaning sentiment, but in reality minimum wage laws cause unemployment, inflation, and reduce profits and output. Also, if raising the minimum wage created wealth, why stop at $7.25 an hour? Why not make the minimum wage $50.00 an hour if it creates wealth? We will address this through economic analysis and graphical illustration.

From a simple accounting model, suppose a small businessman can afford to pay out $40 per hour in wages for his amount of hamburgers that he sells at his hamburger stand. He currently employs 8 people at five dollars per hour per man. Hence, 40 dollars per hour gross wages. If the Federal government interferes with this market equilibrium, through minimum wage laws, what happens? He now has to lay off three people. He now pays 5 people $8.00 per hour, three people get canned.