The inexperienced applicant cannot learn about work without a job. Other Bad Effects. When people cannot get legitimate jobs, it is not surprising that they turn to crime and the underground economy. Studies by Professors Masanori Hashimoto of Ohio State and Llad Phillips of the University of California at Santa Barbara both show that increases in the minimum wage increase teenage crime. A study by Professor William Beranek of the University of Georgia found that the minimum wage increases employment of illegal aliens, who are unlikely to report any violations of the Fair Labor Standards Act to the Department of Labor.
Research also shows that the minimum wage increases welfare dependency.
For example, a recent study by Peter Brandon of the University of Wisconsin found that the average time on welfare among states that raised the minimum wage was 44 percent higher than in states that did not. Much of the reason is reduced employment opportunities for welfare mothers. Intuitively, one would expect a higher minimum wage to make work more rewarding for those on welfare. However, the interaction of the welfare and tax systems means that some working people are actually worse off after an increase in the minimum wage. Finally, the latest research has shown that increases in the minimum wage encourage high school students to drop out - enticed by the lure of higher pay for unskilled work.