abstract:In economics, the equilibrium wage is the wage rate that produces neither an excess supply of workers nor an excess demand for workers and labor market. See economic equilibrium.
Most of us (myself included) will also readily agree that, if equilibrium money wage rates have been increasing at an annual rate of, say, 4 percent (as was approximately true of U.S. average earnings around 2006), then an unexpected decline in that growth rate to another still positive rate can also lead to unemployment.
The economic effect of such small raises, if the minimum wage is set close to the equilibrium point for low and unskilled workers, is not huge in itself, though it has ramifications for general wage levels, for bargaining over wages and benefits.