Minimum Wage Threshold Definition

A 2021 study titled “Redistributive Effects of the Minimum Wage” published in the Quarterly Journal of Economics found that the introduction of a national minimum wage in Germany (€8.50/hour) resulted in wage increases without leading to job losses. However, the authors found that the lack of employment responses masks some important structural changes in the economy: the minimum wage has led to a redistribution of workers from small to larger firms, from low-paid to higher-paid firms, and from less productive firms to more productive firms. Some small firms have had to exit the market, resulting in increased market concentration and reduced competition between firms in the product market, which can lead to higher prices. The study also found that the redistribution of low-wage workers to higher-paid firms came at the expense of longer commutes, which may have worsened the situation of some workers despite higher wages. [98] In addition, students in a technical or vocational program cannot receive less than 75% of the minimum wage while actively enrolling in the program. “It seems equally clear to me that no company whose existence depends on paying its workers less than living wages has the right to continue in this country. Minimum wage rates vary widely in many countries, not just when setting a certain amount of money – for example, $7.25 per hour ($14,500 per year) under certain state laws (or $2.13 for employees who receive tips, known as minimum wage), $11.00 in Washington State, [27] or £8.91 (for people aged 25+) in the UK[28] – but also in terms of pay period (e.g. Russia and China set monthly minimum wages) or the extent of coverage. Currently, the minimum wage in the United States is $7.25 per hour. However, some states do not recognize the minimum wage law, such as Louisiana and Tennessee. [29] Other states have minimum wages below the federal minimum wage, such as Georgia and Wyoming, although the federal minimum wage is applied in these states. [30] In some countries, employers are allowed to count the tips they give to their employees as part of the minimum wage. India was one of the first developing countries to introduce a minimum wage policy into its legislation in 1948.

However, it is rarely implemented, even by contractors from government agencies. In Mumbai, in 2017, the minimum wage was 348 rupees per day. [31] India also has one of the most complicated systems with over 1,200 minimum wage rates depending on geographic region. [32] Modern minimum wage laws date back to the Ordinance of Labourers (1349), a decree of King Edward III that set a maximum wage for workers in medieval England. [11] [12] King Edward III, who was a wealthy landowner, like his masters, relied on serfs to work the land. In the autumn of 1348, the Black Death reached England and decimated the population. [13] The severe labour shortage caused wages to skyrocket and encouraged King Edward III to set a salary cap. Subsequent amendments to the ordinance, such as the Workers` Statute (1351), increased penalties for paying wages above the established rates. [11] If an employer changes the employee`s rate of pay, it must notify employees in advance and notify all affected employees in writing or on the employee`s pay schedule, as required by Labour Code 2810.5 (for more information, see Labour Code 2810.5 and our FAQ). Employers are not penalized for paying a wage rate that goes beyond what is required.

However, they may be held liable for salary arrears and penalties if they pay a lower wage rate than required by law. Employers can minimize confusion and potential liability by providing reasonable written notice of changes and keeping accurate records of these changes. If an employer falls below the threshold of 26 employees in the middle of a pay period and determines that it wishes to pay the lower minimum wage rate, it would not be appropriate to reduce its employee`s wage rate until the next period and only after the required notice of its workforce. The supply and demand model predicts that raising the minimum wage will help workers whose wages will be increased and hurt those who will not be hired (or lose their jobs) as firms cut jobs. However, proponents of the minimum wage believe that the situation is much more complicated than the model can explain. To make matters worse, the individual employer has some market power to determine the wages paid. It is therefore at least theoretically possible that the minimum wage will stimulate employment. While market power of a single employer is unlikely to exist in most labour markets in the traditional “enterprise city” sense, information asymmetry, imperfect mobility, and the personal element of the labour transaction give most firms some degree of wage-setting power. [41] Workers with physical or mental disabilities may receive less than the federal minimum wage, according to the RSA. Disabilities that can affect productive ability include blindness, cerebral palsy, alcohol and drug dependence, mental illness, and developmental disabilities.

About the Youth Minimum Wage Program A minimum wage of at least $4.25 may be paid to workers under the age of 20 for the first 90 consecutive calendar days of employment, as long as their employment does not crowd out other workers. The law does not specify how employers must count employees to determine which rate of pay applies. The question of the number of employees working for an employer refers to businesses with a workforce of about 25 persons or that fluctuates above or below the threshold during the year, including employers employing seasonal or intermittent workers. In these situations, a court or the labour commissioner would likely focus on the facts during a pay period where alleged underpayment occurred. Since this legislation does not impose a restriction on who is counted, they would check whether all employees of that employer have been counted (including those who are exempt from overtime as an officer, director or professional), regardless of the number of hours worked or geographic location. However, for those whose marginal productivity is less than $10 an hour, a minimum wage of $10 an hour leads to an artificial shortage of profitable labour. An unskilled worker with a marginal productivity of $8 an hour in California or Massachusetts can only offer his potential employer work at a loss. This means that the employer can only hire the employee if they are willing to pay more than the marginal income earned by the employee, or if the employer mistakenly believes that the employee`s marginal productivity is more than $10 per hour. Some research suggests that the impact of small minimum wage increases on unemployment is dominated by other factors. [60] In Florida, where voters approved an increase in 2004, a subsequent comprehensive study after the increase confirmed a strong economy with job growth compared to previous years in Florida and better than in the United States as a whole. [61] With respect to on-the-job training, some believe that the wage increase is deducted from training costs.

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