What happens to the quantity demand of labor when governments establish a minimum wage?

When the labor market is in equilibrium, that means that wages are currently at the market rate, or the going rate that firms are willing to pay and workers are willing to agree to when they take on new jobs. In this example, let's say that 50 workers are willing and able to accept jobs that pay $5 per hour.

So what happens when governments intervene in this market with minimum wages? Let's find out.

Governments often impose a minimum wage to raise the wages of workers who are earning very little. A minimum wage is very similar to a price floor because it is set above the market wage.

The quantity demanded for labor decreases.