Minimum wage laws have been developed largely as a result of market failure. Historical evidence
points to workers being exploited by employers in the absence of government intervention. This kind of
market failure means that workers are not always compensated for their contributions, for their increased
productivity, as economic theory would suggest. Much historical evidence suggests that employers will
be able to exploit workers if they are legally allowed to do so. When this happens, the minimum wage
laws may be the only way to keep a large percentage of the labor force from working at wages that are
below poverty level. This point of view means that minimum wage laws are a source of correcting for
existing market failure, enhancing rather than decreasing the power of markets to create efficient results.
points to workers being exploited by employers in the absence of government intervention. This kind of
market failure means that workers are not always compensated for their contributions, for their increased
productivity, as economic theory would suggest. Much historical evidence suggests that employers will
be able to exploit workers if they are legally allowed to do so. When this happens, the minimum wage
laws may be the only way to keep a large percentage of the labor force from working at wages that are
below poverty level. This point of view means that minimum wage laws are a source of correcting for
existing market failure, enhancing rather than decreasing the power of markets to create efficient results.