IELTS vocabulary: Minimum Wage Policy

Minimum wage policy is a recurring Task 2 topic under Work and Economy, and it shows up in Part 3 almost any time a Part 2 cue card touches on jobs, money, or fairness. The vague-vocabulary failure mode is a flat, two-sided script: "the minimum wage should be increased to help workers" against "but this might hurt businesses," repeated with only minor variation across an entire essay. That framing isn't wrong, but it's the least specific version of a genuinely rich economic debate that has precise vocabulary for the policy itself, the case for raising it, the case against, and the empirical nuance in between — and using that vocabulary is what separates a competent essay from a strong one.

Start with vocabulary for the policy mechanism itself, since candidates often use "minimum wage" for several related but distinct ideas. A "wage floor" is the technical term for the legally mandated minimum pay employers may offer — a more precise phrase than "minimum wage" when an essay wants to sound less like a news headline and more like an economics discussion. A "living wage" is a related but different concept: a wage calculated to be sufficient for a basic, decent standard of living in a specific place, which may be considerably higher than the legal minimum. "Wage indexation" refers to a policy of automatically adjusting the minimum wage in line with inflation or cost-of-living changes, rather than requiring a fresh political decision each time — a useful term for essays discussing why a fixed minimum wage tends to lose real value over years without review.

Vocabulary for the case in favour of raising the minimum wage needs to go beyond "it helps workers." "In-work poverty" is precise and specific: poverty experienced by people who are employed but still earn too little to meet basic needs, a phrase that names exactly who benefits from a higher floor. "Purchasing power" describes how much a given wage can actually buy, which is what a wage figure means in real terms rather than as a raw number. "Wage stagnation" names a period in which wages fail to rise even as costs or productivity increase — a useful term for essays arguing that a minimum wage increase is overdue rather than a fresh intervention. "Narrowing the income gap" (the gap between the lowest and highest earners in a society) is the standard phrase for the inequality argument specifically, distinct from poverty reduction, since a policy can narrow the gap without necessarily lifting anyone out of poverty.

Vocabulary for the case against needs similar precision rather than a single word like "unemployment." "Job losses" and "reduced hiring" describe two different mechanisms: losses imply existing positions being cut, while reduced hiring means fewer new positions being created — a business more often responds to a higher wage floor by hiring more slowly than by firing outright, so the second term is frequently the more accurate one. "Increased automation" names a longer-term employer response: replacing higher-cost labour with machinery or software where the wage increase makes that substitution newly worthwhile. "Profit margin" (the proportion of revenue a business keeps as profit after costs) is the term for what a labour-cost increase actually squeezes, and essays that mention it show they understand the mechanism rather than just asserting the outcome. "Labour market" is the general term for the overall system of employers and workers that a minimum wage policy operates within, useful when an essay wants to discuss effects at the level of an entire economy rather than a single business.