Minimum Wage definition

A minimum wage is the lowest legal amount an employer can pay an employee. The majority of countries across the world have some form of minimum wage legislation in place.

The concept of a minimum wage grew out of arbitration boards set up to settle wage disputes before strikes became necessary. Minimum wage laws originally covered only women and children to prevent exploitation – these were extended to the general workforce after the Great Depression, although at first they only covered certain industries.

The wage differs between countries and is often regulated by age – school-age workers can often be paid a lower amount legally than the minimum wage. Some jurisdictions differentiate between workers aged 18+ and 21+.

In the United States, minimum wage laws were first introduced in 1938. Federal law requires a minimum wage of at least $7.25. Most states also have their own legislation, although a minority do not. Some cities also have their own minimum wage laws.

Minimum wage laws are designed to prevent exploitation of employees, reduce poverty, improve standards of living, boosts confidence and morale and forces employers to become efficient. Critics say minimum wage laws increase unemployment, particularly among handicapped and low-skilled workers, and is too economically taxing to businesses.

In the UK, the Living Wage Foundation campaigns for employers to pay a Living Wage, which is updated yearly against the cost of living, based on the argument that the minimum wage does not meet this requirement.

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