Slide Set 2 Minimum Wage.pptx

Slide Set 2 Minimum Wage.pptx - Minimum Wage The Labor...

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Minimum Wage
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The Labor Market and Minimum Wage A minimum wage rate in the United States is set by the federal government’s Fair Labor Standards Act. The Federal minimum wage was originally set at 25 cents per hour. There have been 21 increases. In July 2013 it was raised to $7.25 per hour. To be equal to its 1968 high in inflation-adjusted terms it would need to have been $11 per hour in 2013. Some state governments have set minimum wages above the federal minimum wage rate (e.g., New Jersey). MW by State Most economists believe that minimum wage laws increase the unemployment rate of low-skilled younger workers.
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Nominal and Real Minimum Wage (1999 dollars)
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The Labor Market and Minimum Wage New labor-saving technologies become available every year, which mainly replace low-skilled labor. The immediate effect of these technological advances is a decrease in the demand for low-skilled labor, a fall in the wage rate, and a decrease in the quantity of labor supplied.
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Quantity of labor Q Wage Demand 1 Supply Demand 2 Low Skilled Labor Market W 1 W 2 Q 1 Q 2
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The Labor Market and Minimum Wage A price floor is a regulation that makes it illegal to trade at a price lower than a specified level. When a price floor is applied to labor markets, it is called a minimum wage .
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