Minimum wage in the context of Automation

In economics, a market is a composition of systems, institutions, procedures, social relations or infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services (including labour power) to buyers in exchange for money. It can be said that a market is the process by which the value of goods and services are established. Markets facilitate trade and enable the distribution and allocation of resources in a society. Markets allow any tradeable item to be evaluated and priced. A market emerges more or less spontaneously or may be constructed deliberately by human interaction in order to enable the exchange of rights (cf. ownership) of services and goods. Markets generally supplant gift economies and are often held in place through rules and customs, such as a booth fee, competitive pricing, and source of goods for sale (local produce or stock registration).

Markets can differ by products (goods, services) or factors (labour and capital) sold, product differentiation, place in which exchanges are carried, buyers targeted, duration, selling process, government regulation, taxes, subsidies, minimum wages, price ceilings, legality of exchange, liquidity, intensity of speculation, size, concentration, exchange asymmetry, relative prices, volatility and geographic extension. The geographic boundaries of a market may vary considerably, for example the food market in a single building, the real estate market in a local city, the consumer market in an entire country, or the economy of an international trade bloc where the same rules apply throughout. Markets can also be worldwide, see for example the global diamond trade. National economies can also be classified as developed markets or developing markets.

Price controls are restrictions set in place and enforced by governments, on the prices that can be charged for goods and services in a market. The intent behind implementing such controls can stem from the desire to maintain affordability of goods even during shortages, and to slow inflation, or alternatively to ensure a minimum income for providers of certain goods or to try to achieve a living wage. There are two primary forms of price control: a price ceiling, the maximum price that can be charged; and a price floor, the minimum price that can be charged. A well-known example of a price ceiling is rent control, which limits the increases that a landlord is permitted by government to charge for rent. A widely used price floor is minimum wage (wages are the price of labor). Historically, price controls have often been imposed as part of a larger incomes policy package also employing wage controls and other regulatory elements.

Although price controls are routinely used by governments, Western economists generally agree that consumer price controls do not accomplish what they intend to in market economies, and many economists instead recommend such controls should be avoided; however, since the credibility revolution started in the 1990s, minimum wages have found strong support among some economists.

A wage is payment made by an employer to an employee for work done in a specific period of time. Some examples of wage payments include compensatory payments such as minimum wage, prevailing wage, and yearly bonuses, and remunerative payments such as prizes and tip payouts. Wages are part of the expenses that are involved in running a business. It is an obligation to the employee regardless of the profitability of the company.

Payment by wage contrasts with salaried work, in which the employer pays an arranged amount at steady intervals (such as a week or month) regardless of hours worked, with commission which conditions pay on individual performance, and with compensation based on the performance of the company as a whole. Waged employees may also receive tips or gratuity paid directly by clients and employee benefits which are non-monetary forms of compensation. Since wage labour is the predominant form of work, the term "wage" sometimes refers to all forms (or all monetary forms) of employee compensation.

Penal labor in the United States is the practice of using incarcerated individuals to perform various types of work, either for government-run or private industries. Inmates typically engage in tasks such as manufacturing goods, providing services, or working in maintenance roles within prisons.

The 13th Amendment to the U.S. Constitution prohibits slavery and involuntary servitude except as a punishment for a crime where the individual has been convicted. The courts have held that detainees awaiting trial cannot be forced to work. However, convicted criminals who are medically able to work are typically required to do so in roles such as food service, warehouse work, plumbing, painting, or as inmate orderlies. According to the Federal Bureau of Prisons, inmates earn between 12 and 40 cents per hour for these jobs, which is below the federal minimum wage of $7.25 per hour. There have been proposals of ideas to help incarcerated workers obtain better wages and improved working conditions through unionizing prison labor.

In economics, deadweight loss is the loss of societal economic welfare due to production/consumption of a good at a quantity where marginal benefit (to society) does not equal marginal cost (to society). In other words, there are either goods being produced despite the cost of doing so being larger than the benefit, or additional goods are not being produced despite the fact that the benefits of their production would be larger than the costs. The deadweight loss is the net benefit that is missed out on. While losses to one entity often lead to gains for another, deadweight loss represents the loss that is not regained by anyone else. This loss is therefore attributed to both producers and consumers.

Deadweight loss can also be a measure of lost economic efficiency when the socially optimal quantity of a good or a service is not produced. Non-optimal production can be caused by monopoly pricing in the case of artificial scarcity, a positive or negative externality, a tax or subsidy, or a binding price ceiling or price floor such as a minimum wage.

Involuntary unemployment occurs when a person is unemployed despite being willing to work at the prevailing wage. It is distinguished from voluntary unemployment, where a person chooses not to work because their reservation wage is higher than the prevailing wage. In an economy with involuntary unemployment, there is a surplus of labor at the current real wage. This occurs when there is some force that prevents the real wage rate from decreasing to the real wage rate that would equilibrate supply and demand (such as a minimum wage above the market-clearing wage). Structural unemployment is also involuntary.

Economists have several theories explaining the possibility of involuntary unemployment including implicit contract theory, disequilibrium theory, staggered wage setting, and efficiency wages.

A living wage is defined as the minimum income necessary for a worker to meet their basic needs. This is not the same as a subsistence wage, which refers to a biological minimum, or a solidarity wage, which refers to a minimum wage tracking labor productivity. Needs are defined to include food, housing, and other essential needs such as clothing. The goal of a living wage is to allow a worker to afford a basic but decent standard of living through employment without government subsidies. Due to the flexible nature of the term "needs", there is not one universally accepted measure of what a living wage is and as such it varies by location and household type. A related concept is that of a family wage – one sufficient to not only support oneself, but also to raise a family.

The living wage differs from the minimum wage in that the latter can fail to meet the requirements for a basic quality of life, which leaves the worker to rely on government programs for additional income. Living wages have typically only been adopted in municipalities. In economic terms, a minimum wage is a price floor for labor created by a legal threshold, rather than a reservation wage created by price discovery. The living wage is one possible guideline for determining a target price floor, while a minimum wage is a policy to enforce a chosen price floor.

A price floor is a government- or group-imposed price control or limit on how low a price can be charged for a product, good, commodity, or service. It is one type of price support; other types include supply regulation and guarantee government purchase price. A price floor must be higher than the equilibrium price in order to be effective. The equilibrium price, commonly called the "market price", is the price where economic forces such as supply and demand are balanced and in the absence of external influences the (equilibrium) values of economic variables will not change, often described as the point at which quantity demanded and quantity supplied are equal (in a perfectly competitive market). Governments use price floors to keep certain prices from going too low.

Two common price floors are minimum wage laws and supply management in Canadian agriculture. Other price floors include regulated US airfares prior to 1978 and minimum price per-drink laws for alcohol. While price floors are often imposed by governments, there are also price floors which are implemented by non-governmental organizations such as companies, such as the practice of resale price maintenance. With resale price maintenance, a manufacturer and its distributors agree that the distributors will sell the manufacturer's product at certain prices (resale price maintenance), at or above a price floor (minimum resale price maintenance) or at or below a price ceiling (maximum resale price maintenance). A related government- or group-imposed intervention, which is also a price control, is the price ceiling; it sets the maximum price that can legally be charged for a good or service, with a common government-imposed example being rent control.

Freedom of contract is the principle according to which individuals and groups may form contracts without government restrictions. This is opposed to government regulations such as minimum-wage laws, competition laws, economic sanctions, restrictions on price fixing, or restrictions on contracting with undocumented workers. Freedom to contract underpins laissez-faire economics and is a cornerstone of free-market libertarianism. The proponents of the concept believe that through "freedom of contract", individuals possess a general freedom to choose with whom to contract, whether to contract or not, and on which terms to contract.

Economic progressivism or fiscal progressivism is a political and economic philosophy incorporating the socioeconomic principles of social democrats and political progressives. These views are often rooted in the concept of social justice and have the goal of improving the human condition through government regulation, social protections and the maintenance of public goods. It is not to be confused with the more general idea of progress in relation to economic growth.

Economic progressivism is based on the idea that capitalist markets left to operate with limited government regulation are inherently unfair, favoring big business, large corporations and the wealthy. Progressives believe that a fair market should result in a normal distribution of wealth, but in most countries the wealthy earn heavily disproportionate incomes. Hence, progressives advocate controlling the markets through public protections that they believe will favor upward mobility, diminish income inequality and reverse marginalization. Specific economic policies that are considered progressive include progressive taxes, income redistribution aimed at reducing inequalities of wealth, a comprehensive package of public services, universal health care, resisting involuntary unemployment, public education, social security, minimum wage laws, antitrust laws, legislation protecting workers' rights and the rights of trade unions and a welfare state.

The 1940 Constitution of Cuba was implemented during the presidency of Fulgencio Batista on 10 October 1940. It was primarily influenced by the collectivist ideas that inspired the Cuban Revolution of 1933. Widely considered one of the most progressive constitutions at the time, it provided for land reform, public education, a minimum wage and other social programs. It had 286 articles in 19 sections.

United States labor law sets the rights and duties for employees, labor unions, and employers in the US. Labor law's basic aim is to remedy the "inequality of bargaining power" between employees and employers, especially employers "organized in the corporate or other forms of ownership association". Over the 20th century, federal law created minimum social and economic rights, and encouraged state laws to go beyond the minimum to favor employees. The Fair Labor Standards Act of 1938 requires a federal minimum wage, currently $7.25 but higher in 29 states and D.C., and discourages working weeks over 40 hours through time-and-a-half overtime pay. There are no federal laws, and few state laws, requiring paid holidays or paid family leave. The Family and Medical Leave Act of 1993 creates a limited right to 12 weeks of unpaid leave in larger employers. There is no automatic right to an occupational pension beyond federally guaranteed Social Security, but the Employee Retirement Income Security Act of 1974 requires standards of prudent management and good governance if employers agree to provide pensions, health plans or other benefits. The Occupational Safety and Health Act of 1970 requires employees have a safe system of work.

A contract of employment can always create better terms than statutory minimum rights. But to increase their bargaining power to get better terms, employees organize labor unions for collective bargaining. The Clayton Act of 1914 guarantees all people the right to organize, and the National Labor Relations Act of 1935 creates rights for most employees to organize without detriment through unfair labor practices. Under the Labor Management Reporting and Disclosure Act of 1959, labor union governance follows democratic principles. If a majority of employees in a workplace support a union, employing entities have a duty to bargain in good faith. Unions can take collective action to defend their interests, including withdrawing their labor on strike. There are not yet general rights to directly participate in enterprise governance, but many employees and unions have experimented with securing influence through pension funds, and representation on corporate boards.

In the United States, the minimum wage is set by U.S. labor law and a range of state and local laws. The first federal minimum wage was instituted in the National Industrial Recovery Act of 1933, signed into law by President Franklin D. Roosevelt, but later found to be unconstitutional. In 1938, the Fair Labor Standards Act established it at 25¢ an hour ($5.58 in 2024). Its purchasing power peaked in 1968, at $1.60 ($14.47 in 2024). In 2009, Congress increased it to $7.25 per hour with the Fair Minimum Wage Act of 2007.

Employers have to pay workers the highest minimum wage of those prescribed by federal, state, and local laws. In August 2022, 30 states and the District of Columbia had minimum wages higher than the federal minimum. As of July 2025, 22 states and the District of Columbia have minimum wages above the federal level. In 2019, only 1.6 million Americans earned no more than the federal minimum wage—about ~1% of workers, and less than ~2% of those paid by the hour. Less than half worked full time; almost half were aged 16–25; and more than 60% worked in the leisure and hospitality industries, where many workers received tips in addition to their hourly wages. No significant differences existed among ethnic or racial groups; women were about twice as likely as men to earn minimum wage or less.

This is a list of the official minimum wage rates of the 193 United Nations member states and former members of the United Nations, also including the following territories and states with limited recognition (Northern Cyprus, Kosovo, etc.) and other independent countries. Some countries may have a very complicated minimum wage system; for example, India has more than 1202 minimum wage rates for different types of industries and skill levels. Meanwhile, other countries may have a national rate which often is superseded by state, provincial, cantonal, county and city minimum wage rates. For example, 33 states in the United States have higher minimum wages than the federal rate (plus military rates on federal bases) – on top of this an additional 42 city-level subdivisions having different minimum wage rates and 53 countries. In effect, the United States has over 100 different minimum wages across the nation. This is common in federalist nations such as Canada, and minimum wage in China also has numerous different rates. In the table below, only the lowest minimum wage is cited, or the highest-level subdivision where it applies.