Price Floors: The Minimum Wage

Price floors, when prices are kept artificially high, lead to several consequences that hurt the consumer. In this video, we take a look at the minimum wage as an example of a price floor. Using the supply and demand curve and real world examples, we show how price floors create surpluses (such as a surplus in labor, or unemployment) as well as deadweight loss.

00:00 Price floors
02:22 Surpluses
03:39 Minimum wage creates a surplus
04:46 Minimum wage
07:26 Minimum wages in France
08:23 Minimum wage creates lost gains from trade (deadweight loss)
09:18 Recap

[Djeddozo]

''Price Floors: The Minimum Wage but everytime he says minimum wage, the video will speed up by 5%.''

[DaroffApFire]

Considering that 77% of the job market are services, I'd say that more than a few teenagers are affected by the minimum wage.

[Felddagryph]

There are other positive effects of raising the minimum wage:
1. More low to mid tier goods and services are bought, increasing the demand for laborers in the production of those goods and services.
2. Corporations that pay below a living wage have a harder time pricing out local and well paying businesses, preserving higher paying jobs overall in those sectors.
3. Less tax money is needed for programs such as food stamps and welfare.
4. Workers are less economically distressed, being able to more easily pay for goods and services beneficial to their health, productivity, savings, and ability to invest time and money into making their own businesses if desired.

[mazzb]

If a higher minimum wage (reasonable) equals more unemployment, couldn’t it be said that those jobs technically wouldn’t exist anyway because if they are that easy to eliminate they would have been regardless? Who employs a surplus of unnecessary labor?

[federicofuentes]

I understand this is a basic, entry level video but I would have liked for them to just acknowledge the possibility that increased minimum wage may show a return in increased productivity, reduced turnaround and, by virtue of the increased purchasing power of those benefited, actual economic growth that may offset any loss in demand created by the increase. Similarly, the idea of letting wages float may lead to a race to the bottom (i.e. who's willing to do it for less, which leads to outsourcing, use of undocumented workers, etc) which in turn may actually lead to unemployment. Finally, I worry that they also didn't acknowledge the social component of the issue (i.e., low minimum wages disproportionately affect marginalized groups and increase inequality). I'm not saying all these arguments are true, I just would have liked for them to be contemplated...

[Nellywellum]

701, 000 Americans currently make minimum wage. This also does not include people who are paid service salaries - $2.13 per hour.

[nonyadamnbusiness]

I'm already seeing this before minimum wage goes up. Every new retail store being built has double the number of automated check out lines. The thing that no one talks about is that small businesses can't afford the automation, so they will just have to shut their doors.

[johndoh]

The thing is, our economy doesn't operate at the intersection of the labor supply and demand curves. Rather, it operates well above that. Otherwise we'd have like 50% unemployment as opposed to the 5%-15% unemployment we usually hover around. This is why the minimum wage is necessary.

[christinemarie]

Agreed!  Except for one thing:  That the minimum wage only affects a small percentage of workers.  In fact, those people who are currently making above minimum wage take it in the shorts when the minimum wage is increased.  If they don't get a corresponding increase in their pay, they might just end up making minimum wage themselves for their previously higher value of  skills and experience.

[Scorchcast]

Minimum is not a product and so you can't sell it. The workers are the one selling their time for money. Isn't that correct? So wouldn't that technically mean the workers are the sellers and the owners are the buyers in this particular circumstance?

Scratch that last comment. Sorry, you explained it.

[maxwelltoshach]

5:25 The keyword there is "most."

[Hohniker]

The logic here seems very straightforward.  How would an economist -- or someone else familiar with basic supply and demand economics -- who is calling for a higher minimum wage respond to this argument?  Would they say that the benefit to the employed minimum wage workers would outweigh the detriment to the unemployed?

[Mr.tayara]

What about Turkey? where almost %50 of labors work by the minimum wage? Wouldn't a change in percentage play ''a big role'' in that ?

[Nellywellum]

50% of people making under ten dollars an hour are under the age of 30. The other 50% is 31 and older.

[matthewsaxe]

Does your economic philosophy also endorse trickle down? We know that there are many factors that you are excluding.

[Simran-xnec]

I'm confused as to why price ceiling lies below the equilibrium whereas price floor above that?

[burnhamofvulcan]

It's always fascinating how these people talk about minimum wage affecting very few people without acknowledging state minimum wages below $11 or $15--or whatever the number of the day is. It's just disingenuous.

[MobbingQueen-tybh]

This was 9 years ago . We’ve got robot 🤖 now . Regardless of min wage, unemployment rate increased . What’s the graph for robots

[bes]

How do you explain Germany having high employment yet high minimum wage? It is also very difficult to get fired in Germany, just like in France.

[somebodyoncetoldme]

Minimum wage should 0.
Were supposed to be living in a free society.