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Unemployment: Minimum Wage Laws and Efficiency Wages definitions

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  • Minimum Wage
    A legally set lowest hourly pay that must be above the market rate to impact employment and labor supply.
  • Price Floor
    A government-imposed lower limit on price, preventing transactions below a specified level in a market.
  • Equilibrium Wage
    The pay rate where labor supply matches labor demand, resulting in no inherent surplus or shortage.
  • Labor Market
    The arena where employers seek workers and individuals offer their labor, determining wages and employment.
  • Labor Supply
    The total number of workers willing to work at various wage levels in a given market.
  • Labor Demand
    The quantity of workers that firms are willing to hire at different wage rates.
  • Surplus of Labor
    A situation where more people seek jobs than there are positions available, often due to wage floors.
  • Unemployment
    The condition where individuals are willing to work at the current wage but cannot find jobs.
  • Living Wage
    A pay level considered sufficient for workers to afford basic living expenses.
  • Efficiency Wage
    A pay rate above market equilibrium used by employers to boost worker performance and retention.
  • Worker Turnover
    The rate at which employees leave and must be replaced, affecting training and efficiency costs.
  • Opportunity Cost
    The value of the next best alternative forgone, such as accepting a lower-paying job after job loss.
  • Worker Quality
    The overall skill, reliability, and productivity of employees attracted to a job.
  • Worker Effort
    The level of motivation and diligence employees exhibit, often influenced by wage incentives.