Minimum Wage

Definition

Minimum wage is the lowest hourly rate that employers are legally required to pay their workers. It is a key policy tool used to protect workers and ensure a basic standard of living, with implications for employment, worker protection, and immigration law.

5 Must Know Facts For Your Next Test

1. The federal minimum wage in the United States is currently set at $7.25 per hour, though many states and localities have higher minimum wages.
2. Minimum wage laws aim to ensure workers can afford a basic standard of living and protect them from exploitation, especially in low-wage industries.
3. Minimum wage is a key policy tool used to address income inequality and poverty, though its effects on employment levels are debated by economists.
4. Undocumented immigrant workers are often vulnerable to minimum wage violations and wage theft, as they may be hesitant to report labor law infractions.
5. Minimum wage increases are often tied to cost-of-living adjustments to maintain purchasing power and keep pace with inflation.

Review Questions

• Explain how minimum wage laws relate to employment and worker protection.
  • Minimum wage laws are a key component of employment and worker protection legislation. They establish a baseline hourly rate that employers must pay, with the goal of ensuring workers can meet their basic needs and preventing exploitation, especially in low-wage industries. Minimum wage is intended to provide a wage floor that supports a basic standard of living, while also protecting the most vulnerable workers from being underpaid. However, the effects of minimum wage on employment levels are widely debated, as some argue it can lead to job losses, particularly for low-skill workers.
• Describe the relationship between minimum wage and immigration law.
  • Minimum wage laws have important implications for immigration policy and the treatment of undocumented immigrant workers. Undocumented immigrants are often more vulnerable to minimum wage violations and wage theft, as they may be hesitant to report labor law infractions due to their immigration status. This can lead to the exploitation of undocumented workers, who may be paid less than the minimum wage. At the same time, debates around minimum wage increases often involve concerns about the potential impact on immigrant employment and the competitiveness of industries that rely on immigrant labor. Policymakers must balance the need to protect workers with the potential effects on immigrant employment and the broader economy.
• Evaluate the role of minimum wage as a tool for addressing income inequality and poverty.
  • Minimum wage is widely viewed as an important policy lever for addressing income inequality and reducing poverty. By establishing a wage floor, minimum wage laws aim to ensure that full-time workers can earn a basic standard of living and meet their essential needs. Proponents argue that minimum wage increases can help lift low-wage workers out of poverty, narrow the income gap, and provide a more equitable distribution of the gains from economic growth. However, critics contend that minimum wage hikes can lead to job losses, particularly for low-skill workers, and that other policies, such as the Earned Income Tax Credit, may be more effective at reducing poverty. Ultimately, the effectiveness of minimum wage as a tool for addressing income inequality and poverty remains a subject of ongoing debate and research among policymakers and economists.

Related terms

Living Wage: The minimum hourly wage necessary for a worker to meet their basic needs, including food, housing, and other essential expenses.

Fair Labor Standards Act (FLSA): Federal law that establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in federal, state, and local governments.

Wage Theft: The illegal practice of employers failing to pay workers the full wages they have earned, including minimum wage and overtime pay.