What is minimum wage?
Minimum wage refers to the minimum legal pay that an employee is entitled to for every hour that they put in at work. The minimum wage varies from state to state and is also different for different countries.The difference in the minimum wage is often due to the differences in the cost of living and is periodically revised by most governments and legal authorities. An employer cannot offer an employee anything less than the minimum wage amount and can risk prosecution or even shut down if they do not comply with this law.Not to be confused with:
prevailing wage
Prevailing wage is the rate of pay that contractors and vendors have to offer their employees when doing business with a government agency.
living wage
The living wage is the lowest wage at which an employee's sustenance needs are met.
Not to be confused with:
What is the purpose of setting a minimum wage?
The concept of minimum wage protects the minimum standard of living and tries to protect employees from any exploitation at the hands of their employers. Even though minimum wage has not kept pace with inflation, it still has a hand in controlling income inequality, boosting productivity, and increasing employee retention.The minimum wage also helps promote education and self-improvement among employees. When employees earn enough to maintain a basic standard of living, they can save up and sometimes even take up the degree they had left halfway, in turn leading to a more aware and educated workforce.
