The most denounced of all issues is that of poverty and inequality. One of the government’s solutions to this problem is having a minimum wage. It is observed that the minimum wage cannot reach its goal of eradicating poverty and ironically it worsens the condition in a variety of ways; this is the point of contention of the current paper. The minimum wage is a deficient action to solve society’s problem but its nature and intent has great significance. The minimum wage law is questioned as regards its effects on the working poor, if it will do well or if will further aggravate their condition.
Thus, the effects and impacts of the minimum wage law would further be examined by the researcher. A discussion of arguments will be presented throughout the paper. The employee can look for a company that gives higher wage, but employers too can seek for workers with the same skill but would work for less. This way, they would still have the same profit, same degree of labor, less money to spare. When this is appreciated by an individual, they would think that looking for jobs wouldn’t be as difficult as long as they know the skills needed for a job.
A minimum wage should be set in relation to the wages in the free market so as not to cause a sense of inequity or resentment among employees. Having a minimum wage may cause unemployment if it is not planned out properly (Bartlett 45-48). Non-compliance to the minimum wage may cause a crisis in the employment sector. It may be considered an employer’s achievement to pay their employees in relation to their output with regards to service. Another crisis facing minimum wage, from the point of view of the low-salary group, is that it discourages employers to hire unskilled workers.
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For example, if an employer would employ a worker, he/she would rather employ an individual who is highly qualified for the job compared to the unskilled worker who may work for a lesser wage. Before further understanding the issues concerning minimum wage, its range of functions should be better appreciated. Basically, the minimum wage is an anti-poverty tool; it brings the families of the low-profit group nearer to starvation. It does so by increasing the lowest wages that was given formerly, giving the workers more money to spend and more chances of having a comfortable living. Also you can read the answer on "
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Therefore, by implementing the minimum wage law, it brings the elite classes and the poor class closer, minimizing the gap between them. In accordance to the Department of Labor, millions of workers are at this time employed at minimum wage, and therefore any increase in that wage would directly benefit them. An increase of only 25 cents would add about $2 billion yearly to workers’ wages all over the country, as it did in 1981 (Sharp 181). Upon seeing such raw numbers, it looks like the minimum wage does have the capability of distributing wealth especially to those who need it.
The political followers of the minimum wage have consistently argued that it caters another function: that of enhancing efficiency and attracting welfare recipients into the labor force. There are arguments indicating that the introduction of the minimum wage could increase effectiveness. It would decrease the chances of employees from leaving their jobs. By increasing the minimum wage, it would affect the view of the workers regarding their jobs causing them to stay in their employment. This is an advantage to the employers who would have to spend less on hiring and training new workers.
Moreover, the increased wages could encourage the unemployed to seek labor and could encourage those workers with low productivity to increase their competence in order to maintain or acquire jobs. On the whole, organisations that pay extra for the labor cost would have to increase their workers’ productivity to be able to be effective and avoid losses. (Dillow 47-52). Theorists wanted to know the advantages and disadvantages of the law but some solely want to know the intentions and effects of the law to the working group. It is found out that the minimum wage is mainly dependent on the wage level.
In some cases, it would cause damage but still there are some who may benefit from it. Some studies also that denote the positive and negative effect of the minimum wage is entirely dependent on the level of that wage. The minimum wage may have a positive effect on employment rate but it should be kept in moderation, and failure to do so may cause unemployment. For instance, there is a point at which the minimum wage is so low that no worker will agree to work at that rate, and there is a point at which the minimum wage is so high that no employer would agree to hire a worker at that rate.
The range should be kept in the mean wherein it would be balanced; everything in excess may not be commendable. As evidenced by what happened in the 1980s, wherein the wage rate was set too high, the minimum wage had a negative effect on employment; subsequently it had a positive impact during the 1990s where the minimum wage was in equilibrium (Masters 809-826). A lot of questions come up when the issue about the minimum wage rate is opened. So to rightly explain what minimum wage would really bring out, there must be a show of advantages and disadvantages, the pros and the cons that might occur when minimum wage is eventually be abolished.
First, the positive result of abolishing minimum wage would be discussed. Consequently, the minimum wage law contributed to bringing about thousands of jobs for the economy, as the economists view it. Aside from that, the minimum wage has an effect on teenagers, college students, part-time workers – all of them have their options and opportunities limited. Others indicate that low-paying jobs serve as an oppurtunity for those unskilled individuals who wanted to be employed. Abolishing minimum wage will allow businesses to achieve greater efficiency and lower prices.
To some extent, these companies who are demanded and forced to give out a certain profit would result to an increase in likelihood that these companies would outsource jobs to foreign workers, where labor is much affordable (Masters 810). Institutions that are charity-based are affected by the minimum wage as well as small businesses that had theirs shut down. A minimum wage can give businesses an additional encouragement to modify duties previously held by humans. As well as cost-of- living differences in various areas of the country make a widespread minimum wage difficult to set.
Aside from the fact that the minimum wage creates a competitive advantage for foreign companies, it causes an obstruction in the ability of American companies to compete worldwide, again, an evidence that the government dictates the society on what to do; taking away our personal choice. Citizens have the right to oppose the law if they know that it is wrong (De Fraja 473-488). To further understand the issue stated regarding the abolishment of minimum wage, disadvantages should also enumerated.
If the minimum wage would not be abolished, people who presently work for minimum wage are likely to lose jobs to individuals who can work for much less. Also, workers need a minimum amount of income from their work to survive. To some degree, the worse thing that could happen would be businesses would have more capacity to abuse the working groups. It compels businesses to share some of the huge profit that their company gained with the people that help to produce it. It is noticed by the advocates of the minimum wage that it has not increased for years, which raises an argument.
During that time, they note, price increases has caused to, again, take away the purchasing power of individuals. (Basu C50-C61). It seems only fair that the government should act and boost the earn¬ings of America's lowest-paid workers. With regards to its promoters, despite their intentions, raising the minimum wage may not reach the expected outcome. It may also result to involuntary conflicts. Few of those who would benefit from a higher min¬imum wage are disadvantaged workers. The government needs not to step in the minimum-wage workers in order for them to earn a raise.
It cannot decrease poverty rates, and because of the difficult way that many government aid programs are structured, it will also do little to help the neediest minimum-wage families. Raising the minimum wage has other unintended effects, however. The employers hire lesser workers which discourages the unskilled workers from working or even look for a job. Losing access to posi¬tions that are easily accessible deprives many unskilled workers of the opportu¬nity to learn the skills they need to progress up on a career ladder.
Consequently, a minimum wage hike would harm a worker’s job after this incident. Good intentions are not enough to make an effective policy, or will they abolish the law of unintentional penalty (Neumark 135-138). After stating all the arguments, it all comes down to one thing. It is the government’s job to decide for a minimum wage intended for families who cannot survive on an income presented by the minimum wage law. No matter how detailed the argument, this is where it falls down. No matter how true that statement is, it would still not be a valid argument regarding the minimum wage.
If an individual cannot support a family on his salary, then he should not have a family to begin with. He should have a higher salary first (Crossman 46-48). It is not the fault of business or society that an unskilled and uneducated worker decides to have a family and then finds out that he cannot make ends meet. Moreover, why should the person who is giving him a job be forced to support excess expenditure? Indeed, why should anyone be forced to do so? That may be the suggested question to ask, but surely, it does make some sense.
The case against the minimum wage from an economic point of view has been made many times. Prices of goods and services are increased as it increases employee’s cost. It limits economic growth by increasing the cost of labor. And because it sets standards for employing an individual, it causes unemployment. Just a question to ponder: if the government truly wants to help its poor citizens, then why won’t they give enough so that a family may earn a good life? Why not raise a wage to $12. 50 an hour? Why not just command that every employee is to be paid a minimum of $50 an hour?
That would give an individual more than enough to supprt his family. The problem with a $50 per hour minimum wage is that the government could end all transfer payment programs but one — unemployment compensation. A very harsh increase in the minimum wage would result to an immense unemployment. Minimum wage promoters may be called hypocrites as they do not follow what they say, maybe because if they push it too far, nearly the entire labor force will be unemployed. In time there would be a high unemployment rate, by not keeping the minimum wage in moderation (Hsing 225-228).
When minimum wage is raised, it never fails to elicit a protest. It can be concluded that the minimum wage has nothing to do with economics, but has everything to do with politics. If the members of Congress really wanted to help the economy, they should not interfere with what is happening in the economy. In addition to the economic arguments, there are also philosophical and realistic arguments against the minimum wage. First, all minimum-wage laws are based on the fallacy that selling one’s labor on the market is something special compared with selling one’s goods on the market.
This Marxian fixation based on labor cannot ignore the fact that the price of labor is determined by the law of supply and demand, just like the price of anything else. If minimum-wage laws are needed to “protect” employees, then why aren’t minimum prices needed to “protect” employers? Why doesn’t the state just set minimum prices for everything? The construction of minimum-wage laws by the government must lead to adjusting the prices of labor to be just and reasonable, including the price of everything else.
Allowing the state to interfere in the economy merely opens the door for the state to intervene in every other market. Minimum-wage laws give the government a notion that they are indeed responsible for our comfort and security. Basis for the minimum-wage laws are figments that businesses will take advantage of their workers if without such laws. Advocates of the minimum wage think that individuals would still want to work for less (Dillow 47-52) But if businesses will exploit their workers without the minimum wage, then why do so many people make well above the minimum wage?
Why can’t businesses just force people to work for the minimum wage? The theory of the exploitation of labor is what makes up Marxism and has no place in a society that is existing now. Minimum-wage laws are democratic because they instill in the minds of workers that every individual should be paid fairly. Minimum-wage laws imply that everyone has a right to be paid for what they work for. Everyone has the freedom to work or not work in whatever industry he chooses. Everyone also has the freedom to choose the necessary education or skills to obtain a good-paying job.
Unfortunately, employers have no right to oppose what he and his employer agreed upon. If someone cannot reach the minimum wage, there are several alternatives: they can opt for another job, take on a second, add on to the working members of the family, increase their competencies to get better employment, or stay within the job and work hard for upward movement. Finally, minimum-wage laws may run contrary to “freedom of contract”. It negates the freedom of the employee and the employer to implement the wage that they have reached a consensus on (Crossman 48-50).
The previous arguments prove that the minimum wage indeed has caused anomaly among working groups. Those who are supoosed to benefit from the minimum wage are the ones kicked out of the labor market, resulting to much deeper scarcity. The low-salary class are even discriminated when compared to those highly skilled and educated workers, thus causing them to tire out of finding a job. Next, the employee who does secure a job must work harder than necessary in order to keep his job, and also to keep his employer’s business profitable.
Finally, employers are put at a disadvantage through having to pay higher wages and ironically obtain lower profits, which in turn makes business success more difficult, and thus endangers the jobs of the employees. Through this paper, it has been proven that the minimum wage law does not benefit anyone. Thus, the minimum wage law’s intended goal is not reached as it prevents the lower classes of society to have extra income. It should be clear for anyone who wishes to decrease the rate of poverty that the first reasonable course of action must be taken is the abolishment of the minimum wage laws (Aaronson 164-166).
Hence, considering all the arguments presented, the solution to this enigmatic situation is to abolish all minimum-wage laws, whether federal, state, county or city. It is unfortunate that the Congress which is the party responsible for the minimum wage is also the party that can abolish it. Therefore, it is the members of the congress and their constituents who must be educated in terms of liberty – a liberty that includes total freedom of contract when it comes to employment.
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Dillow, Charles. (2000). "Minimum Wage Myths. " Economic Affairs, March, 47-52. Masters, Adrain M. (1999). "Wage Posting in Two-Sided Search and the Minimum Wage. " International Economic Review 40, 4, 809-826. Neumark, David. (2001). "The Employment Effects of Minimum Wages: Evidence from a Prespecified Research Design. " International Relations 40, 1, 121-144. Pollin, Robert. (2001). "Time for a Living Wage. " Challenge, September-October, 6-18. Sharp, Ansel M. , Charles A. Register, and Paul W. Grimes. (2000). Economics of Social Issues. Boston: Irwin McGraw-Hill.
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