Minimum Wage, Labor Equilibrium, and the Productivity Horizon: A Visual Examination

TL;DR

This paper visually explores how minimum wages relate to labor equilibrium, productivity, and income inequality, highlighting the role of wages in relation to per-capita GDP and labor share dynamics.

Contribution

It introduces a visual framework linking minimum wage, labor share, and productivity, emphasizing wages' dependence on per-capita GDP and their impact on inequality and growth.

Findings

Labor share equals the labor equilibrium equation.

Wages are measured relative to per-capita GDP.

Minimum wage influences income inequality and productivity growth.

Abstract

In this paper, I present a visual representation of the relationship between mean hourly total compensation divided by per-capita GDP, hours worked per capita, and the labor share, and show the represented labor equilibrium equation is the definition of the labor share. I also present visual examination of the productivity horizon and wage compression, and use these to show the relationship between productivity, available employment per capita, and minimum wage. From this I argue that wages are measured in relation to per-capita GDP, and that minimum wage controls income inequality and productivity growth.