Minimum wage is described as the lowest legally acceptable rate that a worker can be remunerated for their services in an hourly, daily or monthly timeframe. In modern economies, companies have consistently strived to maintain low labor costs. An example may be seen from retailers and fast food chains such as Wal-Mart and McDonalds, and their corresponding labor practices. However, low wages hurt the welfare of staff, alongside other disadvantages. It is, therefore, important for companies to provide the workers with wages that meet ethical standards of living. This essay seeks to highlight the need for improving minimum wage rates in the United States and other economies by extension.
Access to meaningful employment is necessary for development in countries. However, businesses attempt to minimize labor costs in the form of wages and other benefits. This has a negative effect on economies since spending among consumers reduces. This is attributable to lower buying power as a result of stifled wages. Businesses are able to provide wages that are beneficial to economies by improving minimum wage levels. Lower income individuals usually utilize their entire paychecks (Fox, 2013). As a result, higher minimum wage will stimulate consumption in economies. Higher wages also stimulate efficiency in business organizations, as they have to identify new means for increasing profitability.
People of lower income levels are usually predisposed to illegal activities, in the efforts of gaining income. For example, they may join the drug trade. By providing them with higher minimum wage, low income earners are able to make their ends meet. As a result, there is little benefit for engaging in criminal activity. Similarly, societies enjoy success due to lower misfitting behavior.
In many countries, governments are tasked with providing benefits to low income earners. This is seen in the form of educational facilities, housing or even food credits. Countries are able to reduce the cost of government-financed welfare programs by improving the minimum wage levels. The beneficiaries will reduce their dependence on the programs due to the income gained, which can sustain them.
Fox, L. (2013). Minimum wage trends: Understanding past and contemporary research | Economic Policy Institute. [online] Retrieved from: http://www.epi.org/publication/bp178/ [Accessed: 10 Dec 2013].