Minimum wages and the multiple functions of wages

Wages are the main source of support for living standards. The need to cover living costs is a constant and important source of pressures from workers for higher minimum wages, particularly in periods of inflation, and also an important reference point in collective bargaining over pay. Multiple functions of wages add to the interest in the processes shaping the wage structure as different actors are motivated by the distinct roles that wages play and take different views over what wage policies and strategies should be pursued. Wages as price underpins mainstream economic theories of wages but the meaning is ambiguous. One set of arguments made in favour of a low minimum wage rate are based on the belief that there are highly variable skills and productivity even among the lower skilled workforce. Wages serve as one of the available management tools at the workplace to influence the labour process and shape employee incentives.