Justified Wage

AAA

DEFINITION of 'Justified Wage'

A wage level for a job that is set by market dynamics and justified by the requirements in terms of the worker's experience, education and skills. Justified wage is the wage level that is high enough to attract workers but low enough to enable employers to offer employment. The divergence between a justified wage and minimum wage may depend on a number of factors including the state of the economy and level of unemployment.

INVESTOPEDIA EXPLAINS 'Justified Wage'

For example, the justified wage for a worker in a fast-food chain with two years of experience may be $10 per hour during normal economic times. But in a recession, the actual level of wages for such a worker may drop to just above minimum wage due to the high level of unemployment and a sluggish economy.




RELATED TERMS
  1. Poverty Gap

    The average shortfall of the total population from the poverty ...
  2. Deadweight Loss

    The costs to society created by market inefficiency. Mainly used ...
  3. Salary Freeze

    The action of a company suspending salary increases for a period ...
  4. Federal Poverty Level - FPL

    The set minimum amount of gross income that a family needs for ...
  5. Living Wage

    A theoretical wage level that allows the earner to afford adequate ...
  6. Minimum Wage

    The minimum amount of compensation an employee must receive for ...
Related Articles
  1. How Much Social Security Will You Get?
    Retirement

    How Much Social Security Will You Get?

  2. The Economics Of Labor Mobility
    Economics

    The Economics Of Labor Mobility

  3. A Review Of Past Recessions
    Insurance

    A Review Of Past Recessions

  4. Understanding Supply-Side Economics
    Economics

    Understanding Supply-Side Economics

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center