Why Do Minimum Wage Laws Cause Unemployment?

The standard economic theory suggests that minimum wage results in an unemployment when the wage is set higher than the equilibrium price. For instance, Fig 1 shows the labor market with minimum wage in a standard supply and demand graph. Theoretically if the government does not regulate the labor market, the supply and demand will be at equilibrium (P* and Q*). When the government imposes a minimum wage laws, that results in price floor (P), below which the price of labor cannot fall. In such cases, economic theory dictates that the number of people looking for work increases (Qs), but only a limited amount of workers will be demanded (Qd). Therefore, under this classic economic model, overall few workers are hired resulting in an increase of unemployment. And this model leads to a conclusion that minimum wage laws can cause unemployment.
Contrary to the results of standard economic theory, several studies have shown that raising minimum wage does not reduce employment by a meaningful amount. For instance, a study conducted by the Center for Economic and Policy Research (CEPR) in 2013 reveals
5). The study also accounted for the type of workers analyzed (either teens or fast food workers), whether the study concentrates on the supply or demand side of the labor market and the author's credibility. The estimated result was diverse, but again it revealed no significant information on minimum wage and its effect on employment (Schmitt, 2013, p. 6). According to Schmitt’s meta-study analysis (2013), of the graph below (Fig 2) “Doucouliagos and Stanley demonstrated in their large meta study of employment effects through the middle of the year 2000s, the minimum-wage literature on teenagers showed a range of positive and negative effects, but also a large spike of the most accurate estimates at, or very near, zero” (p.