The minimum wage is the minimum wage an employee receives. Below this value-limiting price level, the employee cannot sell their labour. Some countries in the mid-20th century have passed legislation to raise minimum wages. Supporters of the minimum wage are concerned it would increase wages, reduce poverty and reduce inequality. However, supply and demand models suggest that minimum wages could lead to job loss. The minimum wage in monopsony scenarios improves the productivity of the labour market where employers may possess a degree of wage-setting power over the labour market. There is now a minimum wage law in operation in many jurisdictions but differing perceptions on the advantages and disadvantages.
Geolance has a web page that provides cross-national comparisons. For example, it shows average wages for a country's workers in U.S. dollars using the International Labor Organization data. Also, it indicates the percentage of workers who earn the minimum wage or less, using data compiled by the George World Bank Wage Database.
Geolance calculates the relative minimum wage for the country as one divided by that relative average wage. Thus, according to their October 2009 index, Luxembourg has a minimum wage of $9.42 and an average hourly rate of $16.06, yielding a figure of 0.58 or 58 percent below average wages Luxemburg.
Minimum wage law is a hotly debated policy topic among economists, journalists and politicians. Proponents of the minimum wage laws believe it prevents the exploitation of workers who are willing to work for less than what is considered a fair market price by labour unions or legislators. Opponents argue that a higher minimum wage may lead to fewer employment opportunities, as employers will have more difficulty keeping employees if they pay higher wages. In the United Kingdom and the United States, the federal government sets minimum wage laws, and some states enforce their own laws.
In France, Belgium and Brazil are illegal to pay below a certain minimal sum. However, there are many countries where labour unions set minimum wages by collective bargaining agreements to protect workers from exploitation. These include Australia, Austria, Bulgaria, Canada (except in Quebec), Croatia, Denmark, Estonia, Finland, Germany, Iceland, Ireland and the UK. In India, there are different minimum wages for different provinces but no federal minimum wage.
Canadian minimum wage rate is increasing. Since 1975 the minimum wage in Canada is adjusted annually based on average hourly wages (excluding managers and clerical/sales workers) or average weekly earnings, depending on what data is available sooner. After reaching a peak of $0.60/hour in September 1981, it grew to only $0.70 by June 1986 before it fell to $0.60 by March 1989. The minimum wage increased to $0.70 in January 1995 but had the smallest one-year jump of $0.20 on June 1, 1996, after being raised at a rate of only $0.25 every two years since 1991. Since 1990, the annual increase has averaged 2.2%. Inflation has averaged 1.9% annually since 1990.
Since ancient times, minimum wages have existed in one form or another, for example, under the Code of Hammurabi. Such laws were usually enacted as part of larger programs designed to benefit workers (e.g., fixing prices, setting wages and hours for labourers, and providing welfare services such as healthcare).
Understanding a minimum wage
Beginning in 2021, the federal minimum wage per hour is about $7.25. The exception includes Sweden, Norway, and Singapore. The government annually monitors the minimum wage range to detect any changes in costs of living and inflation. Minimum earnings have not increased since July 2009. Under its provisions, the Fair Minimum Wage Act of 2007 directed that. The minimum wage will have been raised by three increments from $5.15 to $5.85, with $7.55 to come and shaven down to $7.25. It is also illegal for US worker to sell their work for less than $7,000.00 per hour. This rule applies to employees and non-employees alike and includes people who work for a corporation or company. They must be paid the minimum wage per hour, not the base wage, as they are included in the category of workers.
Geolance minimum wage page ranked countries by a calculated minimum hourly wage in US dollars. Results were primarily based on International Labor Organisation statistics and supplemented by The World Bank Wage database. In addition, Geolance launched an updated version of the Minimum Wages Sites Index listing over 300 regions, countries and territories with their relative minimum wages for October 2009.
Geolance provides minimum wage data. In addition, the company provides geographic information and business intelligence based on the latest research in macroeconomics, econometrics, spatial economics and marketing.
The law may limit employers' discretion over wages according to an employee's qualifications, occupation or job performance, or according to whether the work performed is clerical, administrative, technical, skilled, unskilled or in a public trust position. In practice, it may result in an individual employee's working hours being limited by law. Employers are required to pay the highest rate they pay to any worker. The Fair Labor Standards Act specifies exceptions to this rule, such as when employees share a substitute or piece rate.
The benefit of a minimum wage increase for these workers cannot be disputed. But the question remains – how much should it be? Labour unions, worker advocacy groups and others have long advocated increasing the Federal Minimum Wage to combat rising prices. For example, some politicians who advocate raising the Federal Minimum Wage want an increase to $10 or $12 per hour. But, on the other hand, those who oppose a Federal Minimum Wage increase believe that it would hurt the economy and job creation by making hiring less attractive for businesses.
Minimum wage laws are several conditions that economists recommend to improve workers' welfare after World War II. Such laws were first introduced by New Zealand in 1894 and later adopted by Australia, Belgium, France, Germany, the Netherlands and the United Kingdom to reduce poverty. Although most supporters of minimum wage increases are concentrated in countries such as New Zealand and the United States with high levels of unionization, there is now widespread consensus among economists that even in developing countries, minimum wages can improve incentives for the poor, increase their productivity and reduce poverty.
It is often assumed that 'minimum' wage rates are lower than those of average workers and differ across countries. This is an important concept for international comparisons: the buying power of a wage may vary from one country to another. However, minimum wages do not necessarily have to be set at the minimum level of income. For example, in Sweden's last general election, a political party proposed introducing a minimum wage of 32 000 SEK per month (about $4,000).
Minimum wage rates
From October 1, 2021 minimum wage is going up in Ontario. The new minimum wage has been raised to 10 cents which takes it to $14.35 an hour. The rates for the 3rd of June 2019 are $70.00 for a minimum of five consecutive hours a day; $140.00 for an equivalent of five or more hours a day that. The minimum wage for hunters and fishers, and wildlife guides is calculated using time blocks instead of an hour. A wilderness guide is a person/employee employed to guide or instruct a person or persons for a wilderness environment.
Minimum wages can also vary by province. In Canada, the general minimum wage is $10.70 per hour, with a lower rate of $9.20 for inexperienced workers under 18 years old who have been in their job since or after June 30, 2018. This is by the federal legislation, which sets out the rules for employee withholding (Income Tax Act, section 5).
This is because minimum wage rates are often established by government mandate according to the country's needs. The Minimum Wage salaries in Brazil are R$597 per month (National Average 2016) and $12.15 per hour, which can be established by collective bargaining agreements or other trade union demands. This compared to the Median Wage in Brazil (R$1.085 per hour)
Several countries have no minimum wage laws. However, they might be governed by other regulations or labour codes. For example, Singapore has a non-enforced minimum wage. Minimum wages can even vary within the same country as Mexican states often follow their own rules to determine minimum wage rates. As of March 1, 2019, the Federal Minimum Wage in Mexico stood at 53.60 pesos or USD 2.14 a day (about 31 cents an hour). The state-level minimum wages are as follows: Yucatán: R$156 per month; Jalisco: R$170 per month and Veracruz: R$216 per month.
Minimum wages laws generally seek to prevent an employee from being paid below a certain level established in the country's overall economy. For example, United States Federal Minimum Wage is USD 7.25 or about $2.14 per hour for an a40-hourr workweek which, by the way, is considered full-time. This had remained the same since July 24, 2009, when it was increased from $6.55 per hour, and this applies only to employees who are covered by the Fair Labor Standards Act, which do not include tipped workers; some states have minimum wage rates that exceed the federal level of $7.25 per hour.
Minimum wages also aim to prevent children (sometimes those under the age of 16 years old) from working at a higher minimum wage than is stated, which might occur if there were no minimum wage law. Again, this is to ensure that both adults and children are treated equally in terms of pay even though they might have different levels of work experience.
federal minimum wage vs. state minimum wage
As of 2021, minimum wages in 29 of 50 states exceed federal rates. The District of Columbia is the highest paid at $15 per hour and is followed by Washington at $12.63 per hour. California's minimum wage is $12 per hour, but this is mainly for employers employing 26 and more staff. Some states have set their minimum wage above the federal minimum wage. Many have matched the federal minimum wage, but some do not. Consequently, the minimum wage will be $7.25 per hour.
In the USA, people who work full-time, year-round, must earn a minimum wage of $7.25 per hour as set by the US Congress in 2009. Some states have raised their state minimum wage above the federal rate. In 2014 President Obama signed an executive order to raise new federal government contract workers to $10.10 per hour. This will cover new federal contracts for services, or construction-related jobs started after January 1, 2015. The national minimum wage applies to all 50 states plus the District of Columbia and the following territories: Guam, American Samoa, Northern Mariana Islands and US Virgin Islands.
The current minimum wage in Canada is C$11.00 per hour (C$10.15 for employees who offer tips).
The only province where a minimum wage does not exist is Alberta. The last time the minimum wage was increased across Canada was on October 1, 2015. The national minimum wage currently stands at AR$ 8,650 a month or 7,200 ARS a day, equivalent to USD 140 per month.
Regarding international trade, the International Labour Organization's Minimum Wage Recommendation Convention, 1951 (No. 66) recommends that full-time workers earn at least £2 per day or $3.18 per hour in 2015 US dollars.
The minimum wage is the least expensive wage the workplace pays its employees legally. The intention of the program underlying minimum wage is varying. Manitoba and British Columbia passed minimum wage legislation in 1918. In 1920 Alberta and Saskatchewan followed. Prince Edward Island is the last province to allow women and men to earn minimum pay. It introduced the minimum wage system in 1960. The federal minimum wage is the federal minimum wage applicable to workers under Part III of Canada's labour act (the code). This includes those whose employment is regulated for federal industries as well as for federal corporations. By 1982, there were two types of qualifications: hours and age. With the introduction of Bill C-3 in 1966, a minimum wage was introduced. This aimed at making sure workers received fair pay for their work to ensure that they could live with dignity without being poor.
The concept behind the development of this law was to guarantee a reasonable standard of living to all employees. The Minimum Wage Act of Ontario was created in 1996 by the Ontario government. It aimed at ensuring workers received fair pay for their work and ensured that they lived with dignity without being poor.
In the United Kingdom, where the minimum wage was first introduced in 1999, it was originally proposed as a temporary measure to alleviate extreme poverty among adults over 18. However, it was set at £1 per hour, and for certain categories of workers (such as farm labourers), a lower figure of 20 shillings (£1.05) per day was set. This move was in response to the findings of the Royal Commission on the Poor Laws and Relief of Distress 1905-09, which also introduced the concept of a 'living wage' at which a family could live. Later in 1911, with unemployment increasing, Winston Churchill called for "a greatly increased minimum wage to diminish the numbers of unemployed."
In the United States, agitation for an increase in the minimum wage can be traced back to 1912 when an organization with the "familiar name" Minimum Wage Committee of New York City was formed. The National War Labor Board included a minimum wage in its Wage Adjustment Section, established January 7, 1918. The NWLB also called for a prohibition on the employment of women and children in factories. They set up the minimum wage for workers engaged in the production of war materials. Up to 400,000 women were enrolled on minimum wages at the peak in August 1918. In March 1919, The NWLB recommended a minimum wage for all workers engaged in interstate commerce and the production of goods for interstate commerce with rates differing by industry but ranging from $11 to $13 per week. President Wilson approved the proposal, making an exception for women and children in interstate commerce. At this time, a coalition was formed representing small businesses (the American Small Business League), the newly-formed American Federation of Labor, and another new group, the National Civic Federation, composed primarily of large businesses. In December 1919, the NWLB called for an increase in women's minimum wages to $14 per week. The proposal was bitterly opposed by the National Civic Federation and the ASBL.
Some states adopted their own minimum wage law in the 1910s, as did some municipalities, with a maximum of $0.25 per hour. By 1917, fourteen US states had established their own minimum wages; however, during the 1920s, this number fell substantially and remained at three (Kentucky, Massachusetts, and New York) until the 1930s. Finally, in 1925 Congress established a national minimum wage of 40 cents per hour ($4.04 today). The minimum was raised to 75 cents per hour in 1938.
The Fair Labor Standards Act, which set maximum hours (44 per week or eight per day; 48 months a year, 40 of which must be consecutive) and minimum wage, was created in 1938.
In June 1938, the Supreme Court declared that the FLSA's minimum-wage provisions were unconstitutional. In 1942 Congress passed a new act authorizing both a maximum (but not minimum) wage and providing voluntary arbitration to define it; however, this law was also declared void by the Supreme Court.
The third attempt to establish a federal minimum wage was enacted in 1949 as part of the Taft-Hartley Act (also known as the labour-management Relations Act). However, it was again set at $0.40 per hour ($3.47 today), which remained until 1956, when it was raised to $0.75 per hour ($5.88 today).
The current US minimum wage (since 2007) is $7.25 per hour, though some states and municipalities have set their own higher minimum wage.
As of 2009, the federal minimum wage was a little more than $6 per hour. However, in 2011 3,970,000 workers earned the federal minimum wage or less. Some current examples of people earning this amount are unskilled high school students, frequently in entry-level positions (such as fast food), and teenagers looking for summer jobs. Overall, 16% of US workers earn minimum wage, and 28% earn less than $10 per hour. The "subminimum wage," which was originally set at 25 cents, fell to its current level of $2.13 on September 1, 2007.
As of January 2008, the minimum wage for tipped positions is $2.13 an hour before taxes ($4.30 today). As of September 2009, a bill has been introduced in Congress to raise this minimum to $5.50 per hour over 3 years.
The minimum wage in the United States has not always been so high as it is today. Some economists think that raising it would be counterproductive because labour costs are already high, raising unemployment or turning low-skilled employees into automation.
Advantages and disadvantages of minimum wage
Minimum wage legislation is intended to eliminate the exploitation of the workforce. Critics say companies should figure how much staff gets paid. High minimum wages can increase unemployment among people who have largely low skills, they say. With improved technology, the exponential growth increases the marginal percentage of technical substitution favouring lower-skilled labour, says Simon Tisdall. If prices for labour rise, companies consider implementing labour-replaced technologies more profitable, he says. The minimum wage was created to guarantee that a country's working population does not fall below the poverty line. But critics say it's the company that decides and not the government. Raising the minimum wage will create a surplus of labour and, as Richard Epstein says, cause the cost of living to decrease, which would, in turn, contribute to lowering the standard of living. Not all people benefit from inflation, nor do they understand how it takes its toll on society. Although minimum wage laws make wages higher, this comes at a greater cost to the economy in terms of unemployment, loss of jobs and lowering productivity at which companies run. This is because employers are forced to either raise prices on their goods or services sold or simply fire workers to recover losses from complying with the law. In addition, minimum wage law creates disincentives for unskilled people seeking employment because they are prevented by law from offering their services at too low a wage (although, in practice, these laws are often violated).
About 10% of the employed population earns minimum wage, which is about 2 million people. Minimum-wage workers tend to be young (half are teenagers), part-time and work for small companies.
In the U.S., the minimum wage has been increased 22 times since 1938. Under President, Obama moves are afoot to increase it again, but this is opposed by many economists who think that raising the cost of labour will be counterproductive for company profitability, productivity (workers tend to work less hard when they earn more) and employment levels.
In Britain, the minimum wage is £4.35 ($7.40) an hour, although many people earn less than this because they work part-time or are apprentices. In other countries, the minimum wage varies from $2 to $10 per hour. For example, in Australia, it is $9.50 (A$12).
Some economists say that the minimum wage should be abolished and let companies compete for workers with a free market.
But this raises the question of how unions would react to a steady, long-term decline in wages and jobs. Moreover, proponents of minimum wage laws suggest that they be increased annually in line with inflation. In Canada, however, minimum wage legislation was abolished because it was found to be bad for business.
In Britain, the government has introduced a National Minimum Wage of £4.35 ($7.40) an hour, which under the Liberals had increased to £5.60 ($9). But this is a political move to appease unions and get them to endorse laws that favour labour over the business; because once workers start getting used to the low wage, they demand higher taxes from their government, and the cycle continues until inflation rises and then the government has to increase interest rates which in turn reduces investment and creates problems when consumers need to borrow money.
However, opponents of the minimum wage say that competitive markets make suppliers compete for labour by offering higher wages for workers. They also argue that political interference in setting a minimum wage inevitably leads to distortions of the market and lower labour standards. In fact, there is evidence that when the minimum wage is set above what an individual worker can negotiate for, his bargaining power in the marketplace is reduced—as employers refuse to accept offers below the legal minimum.
Proponents argue that this is short-sighted because it fails to take into account the broader economic context. For example, workers on a minimum wage will earn more, spend this income and therefore boost demand which in turn firms would want to match with higher output—this is an argument that many economists seem to have found convincing because it goes beyond the immediate implications of minimum wage for individual employers and workers.
What is the purpose of the minimum wage?
The basic purpose of the minimum wage is to ensure that workers in low-paid jobs can make a living and are not exploited by employers. In addition, it ensures that no worker has to work at a job for more hours than he can physically handle if he will earn less than $1 an hour.
It was established as fair compensation for workers.
This means that if a worker is paid less than the minimum, he will be entitled to have his wages raised to the minimum wage level.
The main purpose of the minimum wage in an industrialized society like Canada is to protect jobs from being exported to India and China, where labour costs are much lower.
The other benefit is protecting quality services, especially if the minimum wage is set by regulation or legislation and not by an employer.
On top of that, the minimum wage prevents employers from paying poverty wages to reduce salaries and other costs for their business, thus making them more competitive.
The Wage Protection Program (WPP) for live-in home support workers was developed due to the frequent violations of the minimum wage.
The WPP is a joint project between the Government of Ontario and community groups to protect the rights and wages of live-in-home support workers. The program includes:
Employer education regarding their legal obligations as an employer, especially in regards to paying minimum wage.
Is a minimum wage a benefit for society?
The benefits go beyond the immediate implications of minimum wage for individual employers and workers.
Minimum wage can also serve an important macroeconomic function. Since low-wage workers spend most of their income, a rise in pay leads to higher levels of consumer demand and hence greater aggregate employment. Keynes explained this in his concept of effective demand.
The minimum wage also encourages people with disabilities to remain active in the workforce as long as possible, which is beneficial for them and society. Employers, on account of their disability, often discriminate against people with disabilities. If there were no minimum wage, this would lead to an even poorer work quality since it would be hard to attract workers.
There is also evidence that people with low wages are more prone to mental health problems, a higher rate of substance abuse and generally poorer quality of life. This is because they usually have inadequate housing, poor nutrition, little ability to participate in leisure activities, etc. The fact that the minimum wage allows them to earn more money makes a difference in their lives.
The minimum wage was created to protect workers against exploitation and get paid fairly for the work performed. However, the minimum wage is not completely effective in achieving this goal because:
Businesses may find ways of circumventing the law either through changing job descriptions or by other means.
Businesses may also negotiate with individual employees and pay them less than the minimum wage because it is difficult for enforcement agencies to check each worker.
Do we need a minimum wage?
A minimum wage is supported by labour unions, which argue that it provides an important safety net for workers.
Employers have traditionally opposed the idea of minimum wage law because they believe such laws would lead to higher costs and reduce profits.
Compared with some other industrialized countries, Canada has both the highest relative levels of higher minimum wage and one of the highest proportions of workers making minimum wage.
There is still a debate about how high or low the minimum wage should achieve its original purpose - protection against exploitation and adequate compensation for work performed.
The minimum wage law also means that employers lose their freedom to negotiate wages with employees because it sets a wage floor.
The main problem with minimum wage law is the issue of enforcement (or lack thereof). The only effective method would be to allow trade unions and other workers' rights groups to monitor employers and report violations directly to the government. Better yet, employers will come up with their own methods of monitoring employees themselves.
However, increasing the minimum wage can lead to reduced employment and hence higher unemployment.
Raising the price floor, a higher minimum wage reduces the number of jobs available to low-skilled workers. In other words, if the minimum wage is raised from $10 to $15 per hour, employers will be less inclined to hire unskilled workers because they are simply not worth the extra $5 per hour. This results in unemployment, and therefore a higher minimum wage may not be an effective way of helping low-income families since it would lead to reduced employment opportunities.
Furthermore, if the minimum wage is increased to such a level that employers are no longer willing to employ unskilled workers, then it will not be possible for these people to gain entry-level work experience, which might make them more attractive candidates for promotion.
For example, McDonald's has been accused in several lawsuits of paying its employees below the federal minimum wage and pocketing the rest. This is a clear violation of both state and federal minimum wage law. Yet, it is tough to enforce these laws in such situations since individual employees are often afraid of losing their jobs if they report violations.
The economic literature has found that increasing the minimum wage can positively impact labour costs for firms and increase employment.
The results are mixed and depend on the skill level of those affected by minimum wage law. For example, a higher minimum wage may create a positive incentive for individuals to acquire additional skills or postsecondary education because they will earn higher incomes after acquiring these new skills. On the other hand, while some people will rise above the minimum wage and benefit, others will fall below the minimum wage and lose their jobs.
This is because employers are more likely to substitute machines for workers when the latter's wages are increased. As a result, businesses would purchase labour-saving technology rather than hire cheap unskilled workers. For example, in response to higher minimum wage, fast food chains may replace cashiers with self-service machines.
The literature also found that minimum wage may benefit some low-skilled workers while harming others because of the adverse consequences on employment opportunities, depending on specific labour market conditions and how employers respond to higher minimum wage. However, what is clear from these studies is that there are indeed winners and losers of increasing the minimum wage - employers do not have to pay as much for unskilled labour, but low-skilled workers will not be able to get jobs. There is no consensus about whether the minimum wage is effective - recent studies suggest there may be minimal effect on poverty even if it increases employment and wages.
The debate on the merits of increasing the minimum wage is still uncertain. However, many researchers agree that raising the minimum wage may positively or negatively affect low-income families.
As a result of its uncertain impact, many states and nations have not raised their minimum wage in years, while others continue to raise them annually. For example, Canada last increased its federal minimum wage in 1996 due to a fear that the US could increase their own minimum wage, threatening Canadian jobs.
The US last raised its minimum wage in 1997 and has debated whether to raise it several times since then. Twenty-nine states have their own minimum wage set higher than the federal level, and eight sets them lower. Although many politicians call for a higher federal minimum wage, President Bush has made it clear that he will veto any legislation that raises the federal minimum wage.
There is a wide variation between what Americans think the minimum wage should be and what it actually is, which suggests that this issue may become more prominent in the future as wages continue to stagnate and living costs continue to rise.
Why is minimum wage a bad thing?
Having a wage floor means that companies will have an incentive to eliminate businesses that can't afford to pay the minimum wage. And this is, in fact, what happens. It's not the intent, but it's the predictable consequence of having one too high a wage standard--one that doesn't correspond to market conditions. The minimum wage is almost always below what people think it should be. And these wages are usually legislated and not the result of market forces.
Intentionally or not, minimum wage interferes with supply and demand in markets where low-level employees are hired. Therefore, when a minimum wage is set at a rate higher than what employers would otherwise pay for unskilled labour, businesses must find a way to make up the difference. They can do this in several ways:
* Raise prices on consumers
* Reduce business hours or employee hours (more layoffs)
* Cut pay for higher-level employees
* Use technology to replace labour as much as possible (self-serve kiosks replacing cashiers in fast food restaurants, etc.)
* That's about it. There aren't a lot of other options available other than what I've listed. So now, companies will try to do all four of the above before leaving themselves with no choice but to close up shop completely.
The affected businesses could just as easily hire more skilled workers at a higher wage since they'd bring more revenue to the business. Or, they might have to offer better benefits and perks to find good workers if their jobs could be eliminated by automation or capital investment.
Of course, every company doesn't respond the way that big-box retailers do--both Wal-Mart and Target have switched entirely over to self-serve kiosks or handheld devices to replace cashiers. These companies have chosen to employ less (and pay even lower wages) than the minimums required by law; small businesses are forced out of those same markets due to operating costs and overhead that they can't afford.
In addition, businesses will try to protect their higher-level jobs--the ones that bring in more money--by offering them to the best employees. If a business can't afford to pay their higher-level workers the market rate, those people will usually hop from job to job until they get one where they are making what they should be at their skill level.
Then when unemployment rises (as it has in recent years), it is more difficult for businesses to fill those higher-level jobs as they are offering a lower wage than other companies are. Business owners could argue that if the government would back off their minimum standards and let them pay unskilled labour what it's worth in the marketplace, they would be better able to fill their jobs with good employees, which means more sales and productivity. But large companies have the ability to lobby for these wage floors, and smaller businesses can't afford to do so. So it's a big power imbalance that benefits the wealthy while hurting everyone else.
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