Wage Floor
Definition
A wage floor is a government-imposed minimum price that must be paid for each hour worked, typically set above equilibrium wages.
Analogy
Think about going shopping with your friends. If your parents give you $20 as your "wage floor" for the day, you cannot spend less than that amount. Similarly, a wage floor sets a minimum price that employers must pay their workers.
Related terms
Price Ceiling: A price ceiling is a government-imposed maximum price that can be charged for a good or service.
Labor Union: A labor union is an organization formed by workers to protect and promote their collective interests, such as negotiating higher wages and better working conditions.
Elasticity of Labor Demand: The elasticity of labor demand measures how responsive the quantity demanded of labor is to changes in its price (wages).
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