Pros and cons of raising minimum wage
Minimum wage economy reduces level of dependency hence stables economy.Raising the minimum wage would. A crucial part of bringing back growth to the economy is raising people’s purchasing power. Simply put, the more money people are able to spend and put back into the economy, the more the economy grows.increase the disposable income of people, which in turn would boost the bottom line of businesses across the country.With all the aforementioned in motion, raising the minimum wage would not only help the economy grow, but would also give everyone the feeling of economic security and confidence.First, of course, the increase would boost the family income of low-wage workers. At the same time, employers facing a higher minimum wage might demand less labor, leading to more joblessness and lost income in families with low-wage workers. Employers could take some of the higher labor costs out of profits, thus absorbing the hit themselves. Employers also would pass along some of the higher labor costs to consumers in the form of higher prices, reducing their purchasing power.
While this sounds like an arbitrary factor, confidence in the economy has a ripple effect that:
Lowers interest rates making it easier for people to access loans and credit
Boosts performance and returns in the financial market
Given that so many places have raised their minimum wage, this is proof at the very least that policies to increase the wage minimum wage happened alongside real income gains at the national level. An economist’s caution, however, is that correlation is not causation, meaning that just because the two things happened along a time line that makes sense, it doesn’t mean that one caused the other.
There continues to be debate over whether policies such as raising the minimum wage actually raise incomes because higher wages may be offset by employers using less employee time, so that incomes don’t actually rise in the end. While the weight of the empirical evidence points to the conclusion that there have been little or no employment effects from minimum wage increases around the nation, some argue that it hampers employment for some groups or that the “Fight for $15” is a step too far.
What the recent upticks in income and decline in poverty tell us is that we have to seriously consider that raising the minimum wage has done more good than harm. When we combine the income data with the fact that we continue to be amid the longest job-creating recovery since the end of World War II — when the U.S. Bureau of Labor Statistics first began tabulating this data — it’s hard to argue that improving the lives of workers is a bad thing.The highest income families (at least six times the poverty level) have few low-wage workers . For them, the costs from the loss of business income and purchasing power are larger than any boost to incomes from the higher minimum wage. High-income families have received disproportionate gains from economic growth since the 1970s, and increasing the minimum wage would offset some of that substantial rise in inequality.
Effects of minimum wage increase on the economy
Minimum wage economics is a system that can be put up by the government and adopted by organizations to use in their operations of payment of workers. Though workers could be of different levels in the organization basing o their qualifications and skills, the minimum wage economics aim at setting their payments, ensuring equity based on the employee’s proficiency.
Minimum wage economics ensure that employees feel their importance in the organization. Through this method, the employees have a sense of self-confidence since they are motivated by the fact that they earn based on the skills they possess. Since the system pays attention to their qualifications, employees will view that what they learned or studied for is rewarded, improving their morale. This will ensure that they are productive.
The system also ensures maximum utilization of resources by the organization. Since employees are paid only according to their qualification, instances of overpayments are eliminated. The organization will get a chance of diverting the otherwise-spent resources to other sectors; ensuring that they do not go to waste. The end results will be profits.
Minimum wage economics also ensure equity among employees. With the system, employees get fair treatment. Situations, where some employees view others or themselves as more important, are avoided. It ensures a balanced platform. This will make sure that the employees maintain a good relationship with each other. At long last, the employees will corporate and teamwork will e encouraged leading to productivity.
The system also encourages hard work among employees. Since each employee is aware that he or she is paid based on his or her productivity, he or she works hard to earn more. The end result of individual hard work is a productive labor force. As employees aim for more earnings they will work more for the organization.
To the government, minimum wage economics ensure equity in economic levels of its citizens. There will be no very rich and very poor people. Rather, the economic levels of the citizens will be moderate since no one earns a lot and no one earns very little at the same time. Because of this, the country will brag of economic stability. The government’s task of economic development will be made easier.
Many countries have opted to adapt to this system having viewed it is advantageous. Though others have not, it is evident that they are on the verge of doing so having noticed it from other nations. The minimum wage economics is of benefit not only to individuals and organizations but also o the governments. It is an easy to enforce system since it only requires rules to be set up and stipulated then adhered to. Indeed, third world countries have to see what the other developed countries do and act like them if they want to develop. And one of the actions is by adapting the minimum wage economics.
To wrap up, minimum wage economics is an advantageous system and all governments and organizations should enforce it. Though it has demerits and limitations, the merits are numerous and the demerits are few and can be dealt with easily.