A minimum wage is the lowest hourly, daily, or monthly wage that employers may legally pay to employees or workers. Equivalently, it is the lowest wage at which workers may sell their labor. First enacted in Australia and New Zealand in the late nineteenth century,American Academy of Political and Social Science. "The Cost of Living." Philadelphia, 1913. minimum wage laws are now enforced in more than 90% of all countries.ILO 2006: Minimum wages policy (PDF)

There is a broad consensus among economists that minimum wage laws distort the price mechanism and hurt the very people they are intended to help.U.S. Congress Joint Economic Committee "50 Years of Research on the Minimum Wage" Almost three-quarters (73%) of labor economists believe that an increase in the minimum wage increases unemployment. Only 6% believe that an increase in the minimum wage increases employment. When asked which of three policy alternatives (the minimum wage, the earned income tax credit, general welfare) best helps poor families, only 9% of economists cited the minimum wage (70% cited the earned income tax credit). Both supporters and opponents of the minimum wage assert that the issue is a matter of ethics and social justice involving worker exploitation and earning ability. Supporters claim that increases in the minimum wage increase workers' earning power and protect workers against employer exploitation. Opponents claim that increases in the minimum wage increase unemployment; and the unemployment caused outweighs the benefits to minimum wage workers who remain employed, while allowing businesses to more effectively exploit the minimum wage workers who remain.

Minimum wage law

main: Minimum wage law Minimum wage laws vary greatly across many different jurisdictions, not only in setting a particular amount of money (e.g. US$6.55 per hour under U.S. Federal law, or £5.73 (for those aged 22+) in the United Kingdom), but also in terms of which pay period (e.g. Russia and China set monthly minimums) or the scope of coverage. For instance, not all workers may be paid a full minimum wage, because exceptions may be made for teenagers or those under 21. Some jurisdictions allow employers to count tips given to their workers as credit towards the minimum wage level.

Supply curve for labor

The number of hours of labor that workers are willing to supply is generally considered to be positively related to the real wage rate. Economists graph this relationship with the wage on the vertical axis and the quantity (hours) of labor supplied on the horizontal axis. Since higher wages increase the quantity supplied, the supply of labor curve is upward sloping, and is shown as a line moving up and to the right.