Minimum Wage Price Ceiling

This is the minimum price that employers can pay workers for their labor.

Minimum wage price ceiling. If the current market equilibrium wage in for low skill jobs is 10 00 hour in marfa what impact will the new minimum wage have. But if minimum wage is set above market price employers may distribute more work among few workers and terminate rest of the workers in order to not to pay more wage to more workers. If minimum wage is set below the market price no effect is seen.

The federal minimum wage at the end of 2014 was 7 25 per hour which yields an income for a single person slightly higher than the poverty line. For more on the minimum wage see 3 reasons the 15 minimum wage is a bad way to help the poor. At the ceiling price the quantity demanded exceeds the quantity supplied.

It is the lowest price that can be paid for an hour of work. Setting price floor will obviously help few workers in getting higher wage. Price ceilings create shortages by setting the price below the equilibrium.

A price ceiling is the legal maximum price for a good or service while a price floor is the legal minimum price. A this will create a surplus of low skill workers. Before the minimum wage striking workers could always be replaced by workers who were willing to work.

As the cost of living rises over time congress periodically raises the federal minimum wage. A price floor must be higher than the equilibrium price in order to be effective. The most common example of a price floor is the minimum wage.

The opposite of a price floor is a price ceiling. Although both a price ceiling and a price floor can be imposed the government usually only selects either a ceiling or a floor for particular goods or services. Like price ceilings price floors disrupt market cooperation and have consequences quite different from those advertised by their advocates.