Minimum wage

A minimum wage is the lowest remuneration that employers can legally pay their employees—the price floor below which employees may not sell their labor. Most countries had introduced minimum wage legislation by the end of the 20th century. Because minimum wages increase the cost of labor, companies often try to avoid minimum wage laws by using gig workers, by moving labor to locations with lower or nonexistent minimum wages, or by automating job functions. Minimum wage policies can vary significantly between countries or even within a country, with different regions, sectors, or age groups having their own minimum wage rates. These variations are often influenced by the cost of living, regional economic conditions, and industry-specific factors. The movement for minimum wages was initially motivated by a desire to stop the exploitation of workers in sweatshops by employers who were thought to have unfair bargaining power over them. Over time, minimum wages came to be seen as a way to help lower-income families. Modern national laws enforcing compulsory union membership and prescribing minimum wages for members were first passed in New Zealand in 1894. Although minimum wage laws are now in effect in many jurisdictions, differences of opinion exist about the benefits and drawbacks of a minimum wage. Additionally, minimum wage policies can be implemented in various ways, such as directly legislating specific wage rates, setting a formula to adjust the minimum wage based on economic indicators, or establishing wage boards that determine minimum wages in consultation with representatives of employers, employees, and the government. Because it acts as a price floor on labor, standard supply and demand models predict that minimum wages will lead to a surplus of labor (unemployment), particularly among low-skilled workers. However, they can increase labor market efficiency and employment in monopsony scenarios, where individual employers have...