What typically occurs when a government sets a minimum wage above the market equilibrium?

When a government sets a minimum wage above the market equilibrium, it essentially establishes a legal floor for wages that employers must pay their workers. The market equilibrium wage is the rate at which the quantity of labor supplied equals the quantity of labor demanded. When the minimum wage is set above this equilibrium level, employers may be unable or unwilling to hire as many workers at the higher wage, leading to a situation where the number of people seeking jobs exceeds the number of available positions. This situation creates a surplus of labor, as there are more individuals looking for work than there are jobs available at the mandated wage.

This economic principle stems from the basic laws of supply and demand; as the cost of hiring labor increases (due to the higher minimum wage), the demand for labor decreases. Conversely, more individuals are motivated to enter the labor market at the higher wage, contributing to the surplus. Therefore, the outcome of setting a minimum wage above the market equilibrium is characterized by a surplus of labor.