How can unemployment increase when there's a price floor?

Answer 1

I explained this in another question- but it is relevant to this one. The price floor would be the actual price of producin Steel + a 30% mark-up via tariff..

1. For e.g. Suppose in order to protect the U.S. Steel industry, we imposed a tariff on Imports of 30%. this will make steel in the U.S. higher artificially by 30%. All industries that use steel will have to pay a 30% mark-up, these business have higher costs now, some will fold and lay off workers- they cannot compete against countries that buy steel for less, some will be less profitable and hire less workers, and some will mark up their products. The mark-up will mean that the American consumer will pay more for the end-products- a leakage out of the economy since they could have used the money to buy other products - layoffs or less expansion in the other industries.

2. Comparitive advantage- If Steel is not profitable in the U.S., then we are inefectively using our resources, if we produce pharma the best(most efficient), then the economy as a whole does better and hires more workers...

Answer 2

When there is a price floor, labor supplied exceeds labor demanded, and, thus, unemployment increases.

Answer 3

Coz there are more graduated, and they don't want to be paid at price floor. They want higher salary.

Answer 4

Employers are not willing to pay the minimum wage, so employees get their employment terminated.