Minimum Wage
A historical (and current) example of a price floor are minimum wage laws; in this case, employees are the suppliers of labor and the company is the consumer. When the minimum wage is set higher than the equilibrium market price for unskilled labor, unemployment is created (more people are looking for jobs than there are jobs available). A minimum wage above the equilibrium wage would induce employers to hire fewer workers as well as allow more people to enter the labor market, the result is a surplus in the amount of labor available. The equilibrium wage for a worker would be dependent upon the worker's skill sets along with market conditions.
Read more about this topic: Price Floor
Famous quotes containing the words minimum and/or wage:
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—H.L.A. (Herbert Lionel Adolphus)
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—Alfred Tennyson (1809–1892)