Why might a national minimum wage prevent the labour market from clearing?
Assuming that the free labor market wage rate is equal to or above the national minimum wage rate. Then the market will clear at the market wage rate reflected by the intersection of the labor demand and supply curves. Hiowever, if the national minimum wage rate is above the market clearing wage rate, the market will clear. The demand curve for labor automatically get truncated at the minimum wage rate. So if the labor supply at the minimum wage rate is higher than the demand for labor at that wage rate, the market has to continue at that level: the market wage rate cannot go down to increase demand and absorb the excess supply because by law the wage rate cannot go down further.
