Question

"Meow Wolf has set their minimum wage to $17 an hour. The base pay at Meow Wolf is $5.20 higher than the minimum wage of $11.80 per hour in both the city of Santa Fe and Santa Fe County. It’s nearly $10 higher than the U.S. minimum wage of $7.25 per hour and New Mexico's state’s rate of $7.50 an hour. Under legislation signed into law last month, New Mexico’s hourly minimum is set to increase to $9 on Jan. 1, 2020, and will increase annually until it reaches $12 in 2023. That’s a slower pace than Gov. Michelle Lujan Grisham and some lawmakers had hoped; they proposed raising New Mexico’s minimum wage to $12 by 2021. Others called for even higher increases."

1. How much is the minimum wage by Meow Wolf workers being raised to? How does this compare to Santa Fe’s minimum wage? How does this compare to New Mexico’s minimum wage?

2. Draw a demand and supply diagram to represent the labor market in New Mexico. Be sure to label your graph properly (title, axes, curves, equilibrium, etc.). Show how a binding minimum wage affects the labor market. Make sure to show the “surplus” of labor on your graph.

Answer 1

1)The base pay at Meow Wolf is $5.20. The minimum wage at Meow Wolf has been set to $17 an hour.Santa Fe's minimum wage is set to $11.80 per hour.New Mexico's minimum wage is set to $9 on Jan 1st 2020 and will increase every year till it reaches $12 in 2023.

2)The binding minimum wage of $9 which is set above the base pay will increase labor surplus as shown in the diagram by ab.However when minimum wage will be set to $12 in 2023,labor surplus will increase to cd as shown in the diagram.