# Minimum Wage

*Everyday Money — Finicade finance glossary*

The minimum wage is the lowest hourly rate an employer may legally pay. Economically it's a price floor, and the textbook prediction is that a floor above the market rate reduces employment. The evidence is more interesting: modest increases in labour markets with employer bargaining power often show little or no job loss, while large increases relative to the local median show more. That's why the ratio economists watch is the minimum wage as a share of median local pay, not the absolute figure.

**Also known as:** statutory minimum wage, wage floor

**Related terms:** [Living Wage](https://finicade.com/glossary/living-wage), [Real Wages](https://finicade.com/glossary/real-wages), [Unemployment Rate](https://finicade.com/glossary/unemployment-rate), [Supply and Demand](https://finicade.com/glossary/supply-and-demand)

Source: https://finicade.com/glossary/minimum-wage