Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Minimum Wage

What it is:

Minimum wage is the lowest hourly amount an employer may legally pay an employee.

How it works (Example):

If an employer compensates employees on an hourly basis, that employer must pay the employee no less than the minimum wage. In the United States, the minimum wage is set by the federal government. The government periodically modifies the minimum wage to reflect rises in the general price level and cost of living.

Why it Matters:

In the labor market, wages rise and fall depending on the supply and demand for labor. Though it restricts economic efficiency, the argument in support of minimum wage laws is that it curbs employers' attempts to exploit workers and ensures that employees are compensated at a livable rate.

Related Terms View All
  • Qualifying Relative
    For example, let's assume that John and Jane Doe took in Jane's mother because she ran...
  • Ultrafast Trading
    Ultrafast trading relies on software and algorithms that react to other trades in the...
  • Lease Payments
    Leases can be for a variety of assets, though real estate often comes to mind first. For...
  • Shadow Open Market Committee (SOMC)
    Founded by two economists from Carnegie Mellon University and the University of Rochester...
  • Managed Futures Account
    When you buy a managed futures account, in essence you're hiring an expert to buy, sell...