Minimum Wage

minimum wage, lowest wage legally permitted in an industry or in a government or other organization. The goal in establishing minimum wages has been to assure wage earners a standard of living above the lowest permitted by health and decency. The minimum has been set by labor unions through collective bargaining, by arbitration, by board action, and, finally, by legislation. Introduced (1894) in New Zealand through compulsory arbitration, it has become part of the social legislation of almost all countries. Although federal minimum-wage laws were at first held unconstitutional in the United States, a strong fight by organized labor for enactment culminated in the passage (1938) of the Fair Labor Standards Act, which set minimum wages at $.25 per hour for workers engaged in interstate commerce (with some exceptions); the act also set up industry committees to recommend rates for every industry. In 1950 the minimum wage was raised to $.75 per hour. Thereafter, it was raised several times (for example, in 1956 to $1.00, in 1963 to $1.25, and in 1968 to $1.60). In 1974, Congress passed a bill providing for a gradual increase from the prevailing $1.60 per hour to $2.30 per hour by 1976. The bill also extended minimum-wage rules to some 8 million workers not previously covered, including state and local government employees, most domestic workers, and some employees of chain stores. Additional increases raised the minimum wage to $3.10 per hour (1980), $4.25 (1991), and $5.15 (1997). Legislation passed in 2007 raised the minimum wage, in three stages, to $7.25 in 2009. Since 1989 businesses earning less than $500,000 annually have not been subject to minimum-wage rules. A number of states have minimun wages that are higher than the federal minimum wage. See also wages.

See S. Richardson, The Minimum Wage (1927); G. F. Starr, Minimum Wage Fixing: An International Review of Practices and Problems (1981); S. Rottenberg, The Economics of Legal Minimum Wages (1982).

The Columbia Encyclopedia, 6th ed. Copyright© 2013, The Columbia University Press.

Selected full-text books and articles on this topic

Minimum Wage Policy in Great Britain and the United States
Jerold Waltman.
Algora, 2008
The Effectiveness of Minimum-Wage Increases in Reducing Poverty: Past, Present, and Future
Burkhauser, Richard V.; Sabia, Joseph J.
Contemporary Economic Policy, Vol. 25, No. 2, April 2007
Do Minimum Wage Increases Cause Inflation? Evidence from Vietnam
Cuong, Nguyen Viet.
Journal of Southeast Asian Economies, Vol. 28, No. 3, December 2011
State Minimum Wage Differences: Economic Factors or Political Inclinations?
Ford, William F.; Minor, Travis; Owens, Mark.
Business Economics, Vol. 47, No. 1, January 2012
Flsa and the Minimum Wage: Employee Friend or Foe
Sullivan, Laura; Robertson, Tommy J.; Brown, Diana B.
Journal of Legal, Ethical and Regulatory Issues, Vol. 14, No. 1, January 1, 2011
Still Evidence-Based? the Role of Policy Evaluation in Recession and Beyond: The Case of the National Minimum Wage
Butcher, Tim.
National Institute Economic Review, No. 219, January 2012
Fixing Minimum Wage Levels in Developing Countries: Common Failures and Remedies
Saget, Catherine.
International Labour Review, Vol. 147, No. 1, January 1, 2008
Minimum Wages and Social Policy: Lessons from Developing Countries
Wendy V. Cunningham.
World Bank, 2007
The Case for the Living Wage
Jerold L. Waltman.
Algora, 2004
Economic Evolution and Revolution in Historical Time
Paul W. Rhode; Joshua L. Rosenbloom; David F. Weiman.
Stanford Economics and Finance, 2011
Librarian’s tip: Chap. 15 "The Unexpected Long-Run Impact of the Minimum Wage: An Educational Cascade"
The Economics of Imperfect Labor Markets
Tito Boeri; Jan Van Ours.
Princeton University Press, 2008
Librarian’s tip: Chap. 2 "Minimum Wages"
Unequal Democracy: The Political Economy of the New Gilded Age
Larry M. Bartels.
Princeton University Press, 2008
Librarian’s tip: Chap. 8 "The Eroding Minimum Wage"
Living Wage Movements: Global Perspectives
Deborah M. Figart.
Routledge, 2004
Librarian’s tip: Chap. 12 "Minimum Wages and Living Wages: Raising Incomes by Mandating Wage Floors"
The Minimum Wage: Consequences for Prices and Quantities in Low-Wage Labor Markets
Wolfson, Paul; Belman, Dale.
Journal of Business & Economic Statistics, Vol. 22, No. 3, July 2004
The Quest for a Living Wage: The History of the Federal Minimum Wage Program
Willis J. Nordlund.
Greenwood Press, 1997
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