Justified Wage

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.

BREAKING DOWN '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.

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