What Is a Minimum Wage and Why Is It Being Raised?

The minimum wage is being raised. Here's what you should know about it.

The Fair Work Commission (FWC) has announced a raise to the minimum wage by three per cent starting from 1 July this year. That means if you're 21 or older and on minimum wage payments, you'll be getting a nice little amount of extra each week.

But, obviously, when it comes to the minimum wage, there are a variety of differences out there, depending on your age and what sort of work you're doing. 

So, we thought we'd break down a little of the history and what's going to change to make things a bit easier to understand.

Why do we have a minimum wage in the first place?

A basic (or 'minimum') wage was first established in Australia in the early 1900s, though each state had a notion of it beforehand. A little court case was underway in 1906 – 7, now referred to as the Harvester case, where it was decided a (male) worker, even if unskilled, deserves a minimum wage that is "fair and reasonable" in order to be "a human being in a civilised community" and to support his family.

Society has obviously changed since the early 1900s and that idea of fair pay for fair work now applies to all adult workers, regardless of gender, race or sexuality.

Why does it rise every few years?

This one's a little trickier to summarise in a few sentences but the TL;DR is that with the increasing cost of living, workers will need more money to survive.

Each year, the cost of goods increases bit by bit, and this is referred to as inflation. Typically, keeping wages tied to these increases means the economy stays balanced. If wages are too low, fewer products are bought and fewer profits are made, so the economy tends to stagnate. If wages rise too quickly, then it's assumed inflation will rise to meet wages in order for employers to afford the cost of more expensive employees.

It's a finicky interwoven network but if it makes sense to you, congratulations, you just survived Economics 101.

What is the minimum wage now?

As mentioned, this will be dependent on your age until you're 21. A full adult's wage will now be $740.80 a week or $19.49 an hour, up from $694.90 per week or $18.29 an hour.

If you're under 21, you'll have to check your Award (what the government decides is fair for your industry) but it will be a portion of a full adult's wage. For example, an 18-year-old might get 60 per cent of an adult's hourly rate for the same role.

Sadly, the extra $21.60 a week is unlikely to change your life, but it does mean you can afford an extra five coffees per week. Small victories.

Header Image: NBC