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Competitive Wages Vs. Minimum Wages

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Minimum and competitive wages are compared by organizations to examine what is needed to successfully run a business, attract employees and meet financial goals. Wages are often a key factor of success for businesses in the same geographic and market sector.

Minimum Wages

The Fair Labor Standards Act establishes minimum wages. The law requires an employer to pay a minimum hourly wage to employees. Some states also have minimum wage laws that may be higher, and employers are required to pay the higher amount.

Competitive Wages

A competitive wage is established by an employer through industry analysis, competitive markets and business financial goals. This wage is calculated to attract employees to the business by offering similar or higher wages than a competitor.


Economic changes often influence competitive wages. Employers continue to do analysis on unemployment rates and operational costs to raise or lower competitive wages that allow them to maintain financial goals.


Geography plays a factor for minimum and competitive wages because of areas with lower or higher costs of living.


When establishing wages, employers should consider all factors, including the scope of work involved and the employee's ability to sustain personal responsibilities.


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