minimum wage

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minimum wage,

lowest wage legally permitted in an industry or in a government or other organization. The goal in establishing minimum wages has been to assure wage earners a standard of living above the lowest permitted by health and decency. The minimum has been set by labor unions through collective bargaining, by arbitration, by board action, and, finally, by legislation. Introduced (1894) in New Zealand through compulsory arbitration, it has become part of the social legislation of many countries. Although federal minimum-wage laws were at first held unconstitutional in the United States, a strong fight by organized labor for enactment culminated in the passage (1938) of the Fair Labor Standards ActFair Labor Standards Act
or Wages and Hours Act,
passed by the U.S. Congress in 1938 to establish minimum living standards for workers engaged directly or indirectly in interstate commerce, including those involved in production of goods bound for such commerce.
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, which set minimum wages at $.25 per hour for workers engaged in interstate commerce (with some exceptions); the act also set up industry committees to recommend rates for every industry. In 1950 the minimum wage was raised to $.75 per hour. Thereafter, it was raised several times (for example, in 1956 to $1.00, in 1963 to $1.25, and in 1968 to $1.60). In 1974, Congress passed a bill providing for a gradual increase from the prevailing $1.60 per hour to $2.30 per hour by 1976. The bill also extended minimum-wage rules to some 8 million workers not previously covered, including state and local government employees, most domestic workers, and some employees of chain stores. Additional increases raised the minimum wage to $3.10 per hour (1980), $4.25 (1991), and $5.15 (1997). Legislation passed in 2007 raised the minimum wage, in three stages, to $7.25 in 2009. Since 1989 businesses earning less than $500,000 annually have not been subject to minimum-wage rules. A number of states and cities have minimum wages that are higher than the federal minimum wage. See also wageswages,
payment received by an employee in exchange for labor. It may be in goods or services but is customarily in money. The term in a broad sense refers to what is received in any way for labor, but wages usually refer to payments to workers who are paid by the hour, in
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.

Bibliography

See S. Richardson, The Minimum Wage (1927); G. F. Starr, Minimum Wage Fixing: An International Review of Practices and Problems (1981); S. Rottenberg, The Economics of Legal Minimum Wages (1982).

Minimum Wage

 

the wage level of a worker performing simple, that is, unskilled labor.

Under capitalism the minimum wage is based on the subsistence wage, which is directly connected with the value of labor power as a commodity. Capitalists try to set the minimum wage below the value of labor power and to reduce the conditions for the reproduction of labor power to the lowest physiological limits. But the struggle of the working class prevents this, as does the influence of the world socialist system, where living standards are rising at a rapid rate.

In the advanced capitalist countries, as a result of an intense class struggle the minimum wage is now set by legislation, as well as by agreements between employers and trade unions over hourly wage rates. Thus a worker who puts in a full workweek as well as overtime is assured of a wage above the subsistence level. But the great army of workers not employed for a full workday or workweek in fact do not receive even the minimum wage.

Under socialism, minimum standard rates of pay are set by the state. The criterion for determining the minimum wage for workers and the minimum income for the population as a whole is an estimated budget for minimum material security. Such a budget expresses both in money and in kind the minimum needs of workers and their families, given the present level of development of production and the standard of living previously attained. This budget, when considered along with the social funds allocated to consumption, provides for the normal development of the individual. As the productive forces of socialist society develop, as the volume of social production increases and alters its composition, and as the needs of the workers continue to grow, the amount of vital resources needed to ensure the normal reproduction of labor power increases and the minimum wage rises.

In the USSR, minimum wage and salary rates are periodically raised through legislation. The Supreme Soviet of the USSR determines by law the levels and intervals of increases in the minimum wage, mandatory upon all administrative heads of enterprises, ministries, and government offices. In accordance with a decree of the Soviet government in September 1967, the minimum monthly wage for production and office workers employed in the national economy was set at 60 rubles, effective in January 1968. Directives of the Twenty-fourth CPSU Congress have now raised the minimum monthly wage to 70 rubles. This was made uniform for all categories of workers performing simple labor, regardless of the economic sector or geographic location of the enterprise employing production and office workers. The minimum standard wage rates and salary schedules for particular branches of industry or working conditions are differentiated upward from this minimum.

Most workers performing simple, that is, unskilled labor actually receive wages above the established minimum. Workers employed at hourly rates or on salaries receive bonuses in addition to their regular pay; piece workers, beyond their extra earnings for overfulfillment of norms, receive additional compensation because of working conditions or the location of their enterprise. In the USSR, wages paid up to minimum levels are tax exempt.

The minimum wage is set by legislation in other socialist countries as well. In Bulgaria it amounts to 80 leva per month (introduced in 1973); in Hungary, 1,000 forints (1971); in the German Democratic Republic, 350 marks (1971); in Poland, 1,000 ziotys (1970), and in Romania, 1,000 lei (1972).

REFERENCES

Materialy XXIVs’ezda KPSS. Moscow, 1971.
Sarkisian, G. S., and N. P. Kuznetsova. Potrebnosti i dokhod sem’i. Moscow, 1967.
Volodin, V. S. Zarabotnaia plata v usloviiakh sovremennogo kapitalizma. Moscow, 1967.
Kunel’skii, L. E. Sotsial’no-ekonomicheskie problemy zarabotnoi platy. Moscow, 1972.

D. N. KARPUKHIN