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Purpose of Minimum Wage

September 15th, 2006 Posted by Nicole

The purpose of the minimum wage is to provide a base pay rate for employees. That base pay rate is considered to be a fair pay for the work that the employee agrees to. While many employees choose to pay their employees more than the minimum wage, the purpose of the minimum wage is to protect all employees from any alterations in the economy.

The minimum wage was first developed in the U.S. in 1933. While minimum wages had been established in other countries, the U.S. found itself in dire straights in terms of economic vitality in 1933. The country needed to find a way to help employees afford food and housing, even when their work was hard to find. The purpose of the minimum wage was to ensure that all employees were able to afford the basic necessities in the bad Great Depression economy.

Over the years, the base rate for the minimum wage has varied. In 1968, the minimum wage was higher than it has even been. Since 1979, however, the minimum wage has been slowly decreasing. While people generally view the minimum wage as helpful to employees, some economists believe that, despite the purpose of the minimum wage, the minimum wage is ultimately hard on the economy.

In the Clinton administration, it was decided that in addition to a national minimum wage rate, each state could adopt its own minimum wage rate. Some states also gave localities within eh states that right to decide their own minimum wages. When a locality decides its own wage, the purpose of the wage may change. For example, the purpose of the minimum wage in Santa Fe is to provide a living wage for all employees, while the purpose of the minimum wage in other localities and states is simply to ensure that all employees receive fair pay for their work.