Overview
Minimum wage is basically defined as the
minimum or lowest amount that is paid to an employee per hour. The set
minimum wage should be in accordance with the Fair Labor Standards Act,
with few exceptions. Every employer is said to abide by the act to be
legally free. The set minimum wage is in compliance with the federal.
However, each state can set a wage higher than the other, if they
choose. It can vary from state to state by a few dollars per hour.
How it Works
The Fair Labor Standards Act determines the minimum wage. However, there are exceptions to the minimum wage law. For instance, some small cottage industries that turn around only a certain amount of income per year, with a limited number of employees, do not fall under income tax law is exempt from minimum wage laws.Benefits
The minimum wage law was designed to protect workers from unfair employers. This prevents workers from being exploited.Some employers say that minimum wage puts more of a burden on the business and that some labor is not worth the specified rate. At the same time, having a minimum wage set will attract more variety of employees.
Fixing minimum wages minimizes the rate of employee turnover, increases job satisfaction, and improves productivity. If an employee is paid $5 as opposed to $8, the level of employees hired will not match the set level of productivity or quality of work. By setting a minimum wage will pull more quality workers who are dedicated and have a better knowledge base to process the work efficiently. This will in turn reduce the turnover of employees.
Setting minimum wage also has the benefit of sharing the welfare burden from the state. As a result, employment overall tends to increase along with minimum wage increases as well.