Minimum wage, by Wikipedia / CC BY SA 3.0
Minimum wage
A minimum wage is the lowest remuneration that employers can legally pay their workers. Equivalently, it is the price floor below which workers may not sell their labor. Although minimum wage laws are in effect in many jurisdictions, differences of opinion exist about the benefits and drawbacks of a minimum wage. Supporters of the minimum wage say it increases the standard of living of workers, reduces poverty, reduces inequality, and boosts morale. In contrast, opponents of the minimum wage say it increases poverty, increases unemployment (particularly among unskilled or inexperienced workers) and is damaging to businesses, because excessively high minimum wages require businesses to raise the prices of their product or service to accommodate the extra expense of paying a higher wage.
Supply and demand models point to welfare and employment losses from minimum wages. However, if the labor market is not perfectly competitive, minimum wages can increase the efficiency of the market. For example, in a monopsony labor market (i.e. only one employer available), a minimum wage set modestly above equilibrium wages can increase wages, employment, and economic efficiency. Considerable debate still exists among economists about the real-world effect of minimum wages.
Modern national laws enforcing compulsory union membership which prescribed minimum wages for their members were first passed in New Zealand and Australia in the 1890s. The movement for minimum wages was first motivated as a way 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. Most countries had introduced minimum wage legislation by the end of the 20th century.
Modern minimum wage laws trace their origin to the Ordinance of Labourers (1349), which was a decr...
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