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Minimum Wage
According to ILO, the minimum wage can be defined as the minimum or lowest wage an employer must pay an employee, and the wage cannot be reduced past that either by collective agreement or individual contract (Par 1). The minimum wage has always brought controversy between employers and employees. First, employers see the minimum wage as more cost to the business as they wish to pay the employees low wages. On the other hand, employees use the minimum wage to protect their interests since once set, employers cannot change the wages. Therefore it is essential to know the effects of raising the minimum wage to the employees and the employers.
Raising minimum wages or setting them against the employers’ wishes kills the jobs for the employee. Once the wages are raised, the employees have three options: to cut costs, raise prices, or be comfortable with fewer profits (Saltsman par 2). Since each business requires profits, the third option and the first are not considered. The option remaining is cutting costs, and this will involve reducing the workforce. The results are jobs are killed, and employees are rendered jobless.
The employees do not do minimum wage negotiations, but the labor unions with the government’s support. When these states are put in place, the employers are in no position to change them. The only option they have is to reduce the workforce to protect their profits. This was the case in Seattle, where the minimum wage increase led to many employees losing their jobs (Dube par 1).
Raising the minimum wage also have dire effects for the less-skilled workers. According to Pringle, the less skilled workers are the losers when raising the minimum wage (Par 4). Employers will seek to retain the services of the experienced workers and fire the less-skilled workers. That will be in a bid to cut costs and maximize or retain the business’s profits.
The minimum wage is also subjective; when increased, it does not affect some people while others are affected. According to Guo, the minimum wage does not affect independent workers such as uber drivers or people working in large corporations (Par 8). The wage only affects the dependent employees, and when increased, it is those employees who lose their jobs.
According to Pakman, raising the minimum wage may work, but the process must be gradual (Par 6). The same worked for Seattle because even after raising the minimum wage to $15, unemployment decreased, and employees worked for more hours. But this did not happen overnight as Seattle has been increasing the minimum wage gradually over the years.
Some families are still in poverty because of the minimum wage. The reason being since 2009, the minimum wage has been $7.5 (CBO par 1). The wage disadvantaged many low-income families as it was to low to uplift them from poverty. At the same time, they feared an increase in the minimum wage would render them jobless, further pushing their families into more poverty.
Finally, it is crucial to note that an increase in minimum wage prompts employers to cut costs by cutting their workforce, thereby rendering some people jobless. Despite that, the minimum wage increment can happen with minimal or no consequences. The raising of the minimum wage should be done gradually raising little by little until the law’s desire minimum wage. That way, employers will have adapted to the norm and will not have to fire their employees to cut costs.
Works Cited
CBO. “How Increasing the Federal Minimum Wage Could Affect Employment and Family Income.” Congressional Budget Office, 2018, www.cbo.gov/publication/55681#.
Dube, Arindrajit. “Minimum Wage and Job Loss: One Alarming Seattle Study Is Not the Last Word (Published 2017).” The New York Times – Breaking News, US News, World News and Videos, 20 July 2017, www.nytimes.com/2017/07/20/upshot/minimum-wage-and-job-loss-one-alarming-seattle-study-is-not-the-last-word.html.
Guo, Jeff. “The Controversial Study Showing High Minimum Wages Kill Jobs, Explained.” Vox, 27 June, 2017, www.vox.com/policy-and-politics/2017/6/27/15879346/study-high-minimum-wage-job-killer-seattle.
ILO. “1.1 Definition and Purpose.” International Labour Organization, 3 Dec. 2015, www.ilo.org/global/topics/wages/minimum-wages/definition/WCMS_439072/lang–en/index.htm.
Pakman, David. “Study: Seattle’s $15 Minimum Wage WORKED.” HuffPost, 2 July, 2017, www.huffpost.com/entry/study-seattles-15-minimum-wage-worked_b_5959225be4b0326c0a8d118d.
Pringle, Brendan. “New Minimum Wage Hikes Set to Kill Jobs in 2018.” Washington Examiner, 25 Dec. 2017, www.washingtonexaminer.com/new-minimum-wage-hikes-set-to-kill-jobs-in-2018.
Saltsman, Michael. “Increase In Minimum Wage Kills Jobs.” Employment Policies Institute, 2010, epionline.org/oped/o161/.