Minimum wage

An hourly pay rate for workers, set by law, with the aim of reducing poverty and protecting workers from exploitation. Many economists were historically dubious about the benefits of a minimum wage (see Explainer), believing it would reduce demand for labour and thus drive up unemployment. The evidence in practice is that there has been relatively little impact on employment, perhaps because higher wages attract better-skilled workers and reduce staff turnover, or because, in many sectors, using minimum-wage labour is still cheaper than using machinery. For more detail, see our Schools Brief.