Question

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Forum: Topic #2: Is Higher Minimum Wage Standard Good for Workers?

Answer 1

Answer: Minimum wages have been defined as “the minimum amount of remuneration that an employer is required to pay wage earners for the work performed during a given period, which cannot be reduced by collective agreement or an individual contract". The purpose of minimum wages is to protect workers against unduly low pay. They help ensure a just and equitable share of the fruits of progress to all, and a minimum living wage to all who are employed and in need of such protection. Minimum wages can also be one element of a policy to overcome poverty and reduce inequality, including those between men and women, by promoting the right to equal remuneration for work of equal value. Higher minimum wage standard is good for workers because of the following reasons:-

• Raising the minimum wage on a regular basis helps families keep up with price inflation.
• Putting more money in the hands of people who will readily spend it helps the economy.
• A minimum wage spurs economic growth. It gives workers more money to spend. This increases demand and business revenue.
• Increased wages and spending raise demand and create more jobs.
• Workers stay with employers longer (instead of seeking out better-paying work with other companies) reducing businesses’ turnover, hiring, and training costs.
• Lower unemployment and higher wages increase tax revenues.
• When workers earn higher wages, they rely less on governmental “safety net” programs.
• Workers who can cover the cost of living have better morale. They are more productive if they have a decent standard of living.
• It reduces income inequality while providing an incentive to work. The incentive makes it better for society than welfare or a universal basic income.
• Workers who have more time and money can then invest in their education. This further increases their productivity. It improves the attractiveness of the country's labor pool. A more educated workforce increases innovation and the number of small businesses.

Raising the minimum wage would bring more people out of poverty. Though some people would lose their jobs, the working poor as a group would benefit. It will also raise the real income of most families. Opponents believe that increases to the minimum wage will place a burden on employers, especially small companies, resulting in slower growth and decreased levels of employment. Proponents of an increase in the rate say that the minimum wage has not kept up with inflation and that many minimum wage workers are impoverished.

Although there sometimes appears to be much controversy about the size of the employment effects of the minimum wage, the weight of recent evidence shows that minimum wage increases have worked exactly as intended, by raising wages without substantial negative consequences on employment. Some research shows that a minimum wage can increase the number of jobs in an economy. Businesses find other ways to offset higher labor costs. They raise prices or reduce the number of hours worked. Worker morale, productivity, and consumer spending all increase. The minimum wage should provide enough income to afford a living wage. That is the amount needed to provide enough food, clothing, and shelter. Higher minimum wage standard would mean a higher standard of living for the workers. But the pros only outweigh the cons if the minimum wage isn’t too high. Wages cannot be so high that they reduce a company's ability to keep labor costs low during a recession. In setting a minimum wage, the government has to find the sweet spot between protecting workers and giving businesses the flexibility they need to remain competitive.