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The effects of minimum wage laws are hotly disputed by economic theorists. Many argue that they help to reduce poverty, and to raise the minimum standard of living, by raising the wages of the lowest earners in the economy. They also point out that minimum wage laws can improve the economy by giving workers more spending power. Opponents of minimum wage argue that the effects can be quite different. They point out that minimum wage laws in some countries raise labor costs, and therefore overheads for businesses, which lead to businesses outsourcing jobs to countries where labor costs would be lower. Some economists also claim that minimum wage laws can lead to increased unemployment by forcing businesses to be more efficient and cut labor costs. The net effect on the economy, they say might be zero.
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