Handbook of Economics and Ethics
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Handbook of Economics and Ethics

Edited by Jan Peil and Irene van Staveren

The Handbook of Economics and Ethics portrays an understanding of economic methodology in which facts and values, though distinct, are closely interconnected in a variety of ways. From theory building to data collection, and from modelling to policy evaluation, this encyclopaedic Handbook is at the intersection of economics and ethics.
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Chapter 44: Minimum Wages

Ellen Mutari


Ellen Mutari Minimum wages are labour market regulations setting pay level standards. Minimum wage regulations may involve legislated wage floors or the establishment of wage boards that set minimum standards per industry or occupation. The idea of a minimum wage is closely linked to the concept of living wages, that is, the idea that wages should ensure a socially determined, sustainable living standard for workers and their families. Advocacy of minimum wage regulations in industrialized countries took root at the end of the nineteenth century. At that time, minimum wage regulations were one of a number of policies established to protect workers from the vicissitudes of market forces, laying the groundwork for the modern welfare state. New Zealand passed the first country-wide minimum wage law in 1894. Australia, Great Britain and Ireland soon passed similar regulations: Australia in 1904 and the other two countries in 1909. These early minimum wage systems utilized industrial wage boards that set minimum standards for particular industries (Leonard 2000; Waltman 2000). This was the model recommended by an international network of social reformers advocating policies to improve working conditions in sweatshops (small, competitive manufacturing firms, frequently located in apartment buildings in urban areas, where employees worked long hours in crowded, unhealthy and dangerous conditions). The regulatory approach was soon adopted by labour and social reformers in the United States, especially the National Consumers’ League (NCL). In that country, however, the first minimum wage laws applied only to women workers, the primary labour force in sweatshop...

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