Question

Graphically illustrate the labor market’s situation in case of a minimum wage enforcement. Discuss with at least 200 words.

its my question and explain in detail please because I don't understand very well and please do not write HANDWRITE because I don't understand your HANDWRITING

thanks a lot

Answer 1

Labor markets, like all other economic markets, are governed with supply and demand. At each price, there is a quantity demanded and there is a quantity demanded. In the graph below, the supply curve is shown as S and the demand curve is shown as D.

As wage increases, the demand quantity goes down because the employers have to pay more. Conversely, as the wage increases the supply increases obviously more people want to do jobs now.
The point E is shown as the natural equilibrium of the market. This is without minimum wage- the natural point where the demand and supply curves intersect. At this point the wages, shown at $10, are such that there is no excess demand and no excess supply. The total demand is 1200.
Now lets say the government sets the minimum wage at $12. At $12, we can see that the demand is only 700 but the supply is now 1600. There is a surplus of supply by 900 (1600-700).
It is interesting that while now the remaining 700 workers who do have jobs get more wage, there are 500 (1200-700) people who earlier (at natural equilibrium) had jobs but now no longer do. There is always a negative impact of affecting the natural equilibrium of the market. This is called deadweight loss.
Taking the point further, lets see who are the people who get affected the most. When the minimum wages rise, the first to lose jobs are unskilled labor. This is because unskilled labor anyway get the lowest of salaries and employers often don't think that their services are worth the new minimum wage.
So, to summarize, while minimum wages do increase wages for people who remain employed, they also make many people jobless.