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
  • Reaffirmation
    For example, let's assume that John Doe borrowed $100,000 from Bank XYZ for a luxury car...
  • Taking the Street
    Let's say John Doe has a Gordon Gekko complex and wants to make some money by...
  • Umbrella Insurance Policy
    Businesses also obtain umbrella policies to mitigate any lawsuits or judgments. For...
  • Ratings Service
    Companies, such as Moody's, Standard & Poor's (S&P), and Fitch, provide ratings...
  • Kill
    Let's assume you want to purchase 1 million shares of Company XYZ at $20 per share. You...