Federal Minimum Wage

Definition

The federal minimum wage is the lowest pay that employers can legally give their employees. It's set by the federal government.

Analogy

Think of the federal minimum wage as a safety net on a trampoline. It's there to ensure that no matter how low you bounce, you won't hit the ground (or in real terms, fall into poverty).

Related terms

Fair Labor Standards Act (FLSA): This is a U.S. law that establishes minimum wage, overtime pay eligibility, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in federal, state, and local governments.

Living Wage: This is an income level that allows an individual or family to afford adequate shelter, food, and other basic necessities. It tends to be higher than the minimum wage.

Income Inequality: This refers to an uneven distribution of income within a population. Often linked with debates about raising the minimum wage.