Draw the graph · Micro · Labor market
A minimum wage is set
Drag a curve sideways, or use its arrows. A curve you do not move is a curve you are saying stays put.
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Labor demand stays put. Labor supply stays put.
A minimum wage is a price floor in the labor market. It does not change how many workers firms want at each wage, and it does not change how many people will work at each wage. Neither curve moves. The law is a horizontal line drawn across the market above the equilibrium wage. At 15 dollars, more people want to work than firms want to hire, so unemployment appears.
The wage is held above equilibrium, so the quantity of labor supplied exceeds the quantity demanded and unemployment appears.
Common mistake. Students often shift labor demand left to 'show fewer jobs.' Firms hire fewer workers, but by moving up along their unchanged demand curve. Drawing a shift counts the effect twice.
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