minimum wage

(noun)

The lowest rate at which an employer can legally pay an employee; usually expressed as pay per hour.

Related Terms

Examples of minimum wage in the following topics:

  • Fair Labor Standards Act

    • The Fair Labor Standards Act of 1938 established a national minimum wage, forbade "oppressive" child labor, and provided for overtime pay in designated occupations.
    • Police officers, fire fighters, paramedics, and other first responders are also entitled to overtime wages and minimum wage pay.
    • Covered nonexempt workers are entitled to a minimum wage of not less than $7.25 per hour effective July 24, 2009.
    • Many states also have minimum wage laws, at a rate not less than one and one-half times the regular rate of pay is required after 40 hours of work in a workweek.
    • This graph of the minimum wage in the United States shows the fluctuation in government guarantees for minimum standards of labor.

  • Fair Labor Standards Act

    • The Fair Labor Standards Act (FLSA) established a national minimum wage, "time-and-a-half" for overtime in certain jobs, and etc.
    • The October 26, 1949 Fair Labor Standards Amendment included changes to overtime compensation, defined a "regular rate," redefined the term "produced," raised the minimum wage from 40 cents to 75 cents per hour, and extended child labor coverage.
    • In 1955, the FLSA was amended once again to increase minimum wage, this time to $1 per hour.
    • Subsequent amendments have continued to raise the minimum wage level according to inflation.
    • Several exemptions exist that relieve an employer from having to meet the statutory minimum wage, overtime, and record-keeping requirements.

  • Price Floors

    • By establishing a minimum price, a government seeks to promote the production of the good or service and ensure that the producers have sufficient resources to go about their work.
    • An example of a price floor is the federal minimum wage.
    • History of the federal minimum wage in real and nominal dollars.
    • The federal minimum wage is one example of a price floor.

  • Monetary Employee Compensation

    • Many countries dictate the minimum base salary by defining a minimum wage.
    • Salaries and wages are tied to a job description that lays out the expectations and responsibilities of an employee.
    • Additionally, behavioral and organizational psychologists have considered salaries in comparison with skill level to determine how employees perform based on their wage level.
    • A map of the United States comparing state minimum wage laws to the federal minimum wage.
    • Kansas is the only state with a minimum wage rate lower than the federal one.

  • Ceteris Paribus

    • What would happen to the demand for labor by firms if a minimum wage was imposed at a level above the prevailing wage rate, ceteris paribus?
    • E is the equilibrium wage level when there is no binding minimum wage.
    • When a minimum wage is imposed, ceteris paribus, suppliers of labor are willing to provide more labor than firms (demand for labor) are willing to purchase at the binding minimum wage rate.
    • There is no shifting of either curve related to behavior influenced by the higher wage rate because ceteris paribus is holding labor-leisure trade-off (of workers) and substitution of labor (by firms) constant, along with other potential influencing variables.

  • Employment Policy

    • Federal law establishes minimum wages and overtime rights for most workers in the private and public sectors; state and local laws may provide more expansive rights.
    • The Fair Labor Standards Act of 1938 (FLSA) establishes minimum wage and overtime rights for most private sector workers, with a number of exemptions and exceptions.
    • A number of states have enacted higher minimum wages and extended their laws to cover workers who are excluded under the FLSA or to provide rights that federal law ignores.
    • Local governments have also adopted a number of "living wage" laws that require those employers that contract with them to pay higher minimum wages and benefits to their employees.
    • This graph of the minimum wage in the United States shows the fluctuation in government guarantees for minimum standards of labor.

  • Labor Laws

    • Employment standards are social norms (and in some cases also technical standards) for the minimum socially acceptable conditions under which employees or contractors will work.
    • These standards include concepts like minimum wage, health and safety regulations, equality, and other protections against abuse.
    • Employers' costs can increase due to workers organizing to achieve higher wages, or as a result of laws imposing costly requirements (such as health and safety) or restrictions on their free choice of whom to hire.
    • Though there is a minimum hourly wage in the U.S., the value of that minimum wage has decreased over time as the wage fails to adjust with inflation.
    • In the 1960s and 1970s the federal minimum wage was equivalent to about 9 dollars in 2013, while the 2013 federal minimum wage was 7 dollars.

  • The Benefits of Socialism

    • Social security schemes also provide security in old age, while minimum wages, employment protection, and other labor rights ensure a fair wage and safety at work.
    • Social democracies typically employ various forms of progressive taxation regarding wage and business income, wealth, inheritance, capital gains and property.
    • Minimum wages, employment protection and trade union recognition rights for the benefit of workers.
    • These policies aim to guarantee living wages and help produce full employment.
    • Demonstrate how the nationalization of key industries, redistribution of wealth, social security schemes and minimum wages are beneficial in socialist economies

  • Arguments for and Against Government Price Controls

    • Generally price controls are used in combination with other forms of government economic intervention, such as wage controls and other regulatory elements.
    • One of the best known price floors in the minimum wage, which establishes a base line per hour wage that must be paid for work.
    • As a result, employers hire fewer employees than they would if they could pay workers lower than the minimum wage.

  • Impact of Unions on Unemployment

    • If the labor market is competitive, unions will typically raise wages but increase unemployment.
    • This is illustrated in the graphic, in which a union successfully raises the wage rate above the equilibrium wage.
    • If we assume that the labor market is imperfect and that wages are naturally lower than the marginal revenue product of labor, unions may increase efficiency by raising wage rates closer to the efficient level.
    • In this case, wages will rise without a resulting rise in unemployment.
    • If a union is able to raise the minimum wage for their members above the equilibrium wage, then wages will be higher but fewer workers will be employed.