Final answer:
The U.S. federal minimum wage of $7.25 per hour is a price floor aimed at ensuring workers can afford a basic standard of living, but has been criticized for being too low. Movements for a living wage suggest the current minimum wage does not meet the cost of living needs, as full-time minimum wage work generates an annual income below the poverty line for families.
Step-by-step explanation:
The minimum wage is a classic example of a price floor implemented in the labor market to support the income of low-paid workers. In the U.S., the federal minimum wage as of 2016 was $7.25 per hour, which aimed to ensure that a person working full time could afford a basic standard of living. However, the annual income from working full-time at federal minimum wage is just barely above the Federal poverty line for a single person, and well below the poverty line for larger families, which led to the push for a higher, so-called 'living wage'.
Due to cost of living increases, there have been movements at local levels to raise the minimum wage to what is considered a living wage. The argument is that the current federal minimum wage does not provide enough to ensure a reasonable standard of living because if two adults earning minimum wage and with young children were to both work full time, it would be more cost-efficient for one to stay home and provide childcare. Therefore, their combined working income would be $14,500 annually, which falls short of the federal poverty line for a family of four which stood at $24,250 in 2015, and even more so in comparison to the 2021 threshold of $26,500.