1.6.6 National Minimum Wage

National Minimum Wage

A legally mandated lowest hourly wage that employers must pay to employees.

National Living Wage

The minimum wage that must be paid to workers aged 21 and over.

Minimum Wage Act 1998

Legislation introduced to provide a fair wage to low-paid workers in the UK.

Effects of National Minimum Wage

The consequences of implementing a minimum wage, including impacts on labor supply, demand, and employment.

Current Rates of Minimum Wage

The updated hourly rates effective from April each year for different age groups.

Arguments for National Minimum Wage

Benefits such as reducing inequalities, encouraging labor supply, and improving living standards.

Arguments against National Minimum Wage

Disadvantages including potential job losses, market interference, and reduced competitiveness.

Impact on Firms

Higher wage costs may result from implementing a national minimum wage, affecting profitability and employment.

Elasticity of Labor Demand

The responsiveness of the quantity of labor demanded to changes in wage rates.

Excess Supply

A situation that arises when the quantity of labor supplied exceeds the quantity demanded at a given wage.

Perfectly Competitive Labor Market

A market where many firms compete to hire workers and no individual firm can influence the wage rate.

Monopsony Labor Market

A market structure where a single buyer (employer) has significant control over the wage and employment levels.

MRPL

Marginal Revenue Product of Labor, which represents the additional revenue generated from employing one more unit of labor.

Wage Costs Impact

When wages increase, the overall costs for firms rise, which can impact their revenue and profit margins.

Quality of Workers

Higher wages may attract better quality workers, increasing their productivity and contribution to the firm.

Living Wage

A wage that is high enough to maintain a normal standard of living.

Welfare Burden

The financial support provided by the government that may be reduced if higher wages are paid.

Aggregate Demand

The total demand for all goods and services in an economy at a given time and price level.

Unemployment Rate

The percentage of the labor force that is jobless and actively seeking employment.

Standard of Living

The degree of wealth and material comfort available to a person or community.

Labor Supply

The total hours that workers are willing and able to work at a given wage rate.

Trade Union

An organization that represents the collective interests of workers, often advocating for higher wages.

Demand for Labor

The desire of firms to hire labor based on current wage rates and economic conditions.

Misallocation of Resources

Inefficient distribution of labor and capital in an economy that can happen due to external interventions like minimum wage.

National Minimum Wage Rates

Set hourly pay rates for different ages and job categories that are updated annually.

Firm Reputation

Public perception of a firm, which can be negatively affected by non-compliance with wage laws.

Labour Market Equilibrium

A state where the quantity of labor supplied equals the quantity of labor demanded.

Labor Demand Curve

Graphical representation showing the relationship between wage rates and the quantity of labor firms wish to hire.

Supply Curve Shift

A movement in the supply curve indicating a change in the willingness of laborers to work at different wage levels.

Market Mechanism

The process by which supply and demand interact to determine prices in a free market.

Job Satisfaction

The level of contentment employees feel regarding their job roles, often impacted by wage levels.

Minimum Wage Policy Effects

The various outcomes on employment, wages, and overall economic health resulting from minimum wage laws.

Labor Market Flexibility

The ease with which labor markets can adjust to changes in economic conditions.

Youth Employment Rates

Statistics reflecting the job availability and employment levels among younger demographics.

Apprentice Rate

The minimum wage rate specifically set for apprentices.

Pricing Strategy

Approach firms take regarding their pricing structure, influenced by factors like minimum wage.

Economic Equity

Fair distribution of economic resources among individuals and groups within society.

Living Wage Foundation

An organization that campaigns for employers to pay a living wage based on the cost of living.

Labor Market Analysis

The study of employment trends, wage rates, and labor demand/supply dynamics.

Policy Implementation

The process by which laws or regulations, like minimum wage, are enacted and enforced within the economy.

Wage Compression

A situation where the wage difference between lower and higher-paid workers narrows, potentially due to minimum wage increases.

Living Wage vs. Minimum Wage

A living wage provides enough income for a normal standard of living, while minimum wage is the lowest legal wage set by law.

Labor Force Participation Rate

The percentage of the working-age population that is either employed or actively seeking employment.

Inflationary Pressure

Economic conditions that cause prices to rise, which can be influenced by increased wage rates.

Underemployment

A situation where workers are employed in jobs that do not utilize their skills or provide adequate hours.

Skill Gaps in Labor Market

The mismatch between workers' skills and the skills required for available jobs, often affecting employment.

Economic Impact of Wage Policies

Effects that changes in wage laws have on economic growth, inflation, and labor market dynamics.

Regional Minimum Wage Variations

Differences in minimum wage rates set by local or regional governments based on cost of living.

Nudge Theory in Employment

Using behavioral science principles to influence workers and employers towards better wage and employment practices.

Job Market Signals

Indicators such as wage levels and job availability that reflect the health of the labor market.