products at the price floor are better off than if they had to accept the
lower equilibrium price. Workers and farmers are among the politically
active, organized groups who have gained much by persuading
governments to establish price floors enabling them to sell their goods or
services at prices above free-market levels. If the demand is inelastic, as it
often is for agricultural products, sellers earn more income in total (even
though they sell fewer units of the product). The losses are spread across
the large and diverse set of consumers, each of whom suffers only a small
loss.
Applying Economic Concepts 5-1 examines the case of a legislated
minimum wage in more detail, and explains the basis of the often-heard
claim that minimum wages increase unemployment. We discuss the
effects of minimum wages in greater detail in Chapter 14 , when we
examine various labour-market issues.
Applying Economic Concepts 5-1
Minimum Wages and Unemployment
All Canadian governments, provincial, territorial, and federal,
have legislated minimum wages. For those industries covered
by provincial or territorial legislation (which includes most
industries except banking, airlines, trucking, and railways), the
minimum wage in 2019 ranged from a low of $10.96 per hour in
Saskatchewan to a high of $15.00 per hour in Alberta. This box