Minimum wage facts for kids
The minimum wage is the least amount of money that employees of a business can be paid. Minimum wage is a relative term. Different countries have different minimum wages. Nunavut in Canada has a minimum wage of $11.00 per hour. Ontario, another place in Canada has a minimum wage of $10.25 per hour.
Some people think the minimum wage should be raised, so poor people will have more money. Others think it is worse because the government will not have enough money to pay all the employees, so they will raise the taxes or raise the inflation.
Some people think that the minimum wage is harmful to employees because companies only hire employees whose labor is worth the price they are required to pay. They think that if the minimum wage is raised employees will lose their job because companies cannot afford to pay them the raised minimum wage.
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Modern economic theory suggests an excessive minimum wage may raise unemployment as it fixes a price above demand for labor, but a reasonable minimum wage enhances growth because workers lack bargaining power and labor markets are persistently monopsonistic. When poorer workers have more to spend it stimulates effective aggregate demand for goods and services.
Minimum wage levels in OECD countries as a share of average full-time wage, 2013.
A 2010 study published in the Review of Economics and Statistics compared 288 pairs of contiguous U.S. counties with minimum wage differentials from 1990 to 2006 and found no adverse employment effects from a minimum wage increase. Contiguous counties with different minimum wages are in purple. All other counties are in white.
Minimum wage Facts for Kids. Kiddle Encyclopedia.