Minimum wage means the lowest salary an employer has to pay to his employees daily, monthly or yearly. In other words minimum wage prevents employers legally from lowering the salary of the employees below a particular benchmark. At first sight minimum wage seems to be helping the employees; however there are many controversies associated with minimum wage. Proponents argue that minimum wage would prevent employers from exploiting the employees and it will help the employees to reduce their poverty level and increase their living standards. Critics are of the view that minimum wage forces employers to appoint only skilled workers and therefore employees with lesser skills may struggle to get employment. This paper argues in favour of minimum wage after analysing both the sides of the issue.
“The vast majority of economists believe the minimum wage law costs the economy thousands of jobs”(Messerli). In their opinion, enforcement of minimum wage will decrease the demand for workers. They explain their argument based on the supply and demand theory of economics. When salary goes up, supply of workers will also goes up and thereby the demand for the workers will geos down. In other words, when supply increases, demand decreases. The above theory might be true in theoretical terms, but in practical terms, it may not be so. It should be noted that majorities of the western countries are outsourcing their jobs to India like Asian countries at present because of the labour shortage. It should be noted that in countries like America and Britain, an ordinary worker is getting salaries, three to four times more than that an Indian worker is getting in his country. In other words, even though the wages are high, supply of labour force is not increasing in countries like America and Britain. On the other hand, in India like countries even though the wages are low, excess of supply of labour is in place. These factors clearly show that it is not necessary that minimum wage may increase the supply and thereby decrease the demand.
“Teenagers, workers in training, college students, interns, and part-time workers all have their options and opportunities limited by the minimum wage” (Messerli). The above argument also seems to be illogical. Part-time work and full time work should be separated from each other. Minimum wage for part time work need not be the same as that of the full time. Authorities can prescribe separate norms of minimum wage with respect to part time and full time work. Moreover, separate minimum wage norms can be enforced with respect to the qualification and experience of the employees.
“Abolishing the minimum wage will allow businesses to achieve greater efficiency and lower prices. Anytime you give businesses more flexibility, you will increase efficiency and lower prices” (Messerli). It is an accepted fact that only a satisfied worker will try to deliver more than 100% of his efficiency. In other words, workers who struggle to get a decent salary may not be fully committed to the organization. It is better for an organization to have more committed workers to increase its efficiency and productivity rather than having a huge workforce of unskilled or cheaper labours. Salary is the major motivating factor for the employees and therefore minimum wage will definitely motivate the workers more and thereby the organization will be benefitted.
“Adults who currently work for minimum wage are likely to lose jobs to teenagers who will work for much less. Many adults trying to make a living are forced to work minimum wage jobs” (Messerli). Employers may exploit the workers in the absence of a minimum wage law. They will try to terminate experienced workers even without any reasons, for appointing fresh workers in order to reduce their employee wage expenditure. Thus, even experienced employees will be forced to work under tremendous pressure if minimum wage law is not implemented. In the absence of minimum law, business will take undue advantages in the form of exploitation of manpower or labour force. Even though there are many resources available for an organization, manpower resource seems to be the most important one since without human supervision; no other resources can be mobilized. Under such circumstances, rewarding of manpower resource in a proper manner is the legal and ethical responsibility of the organizations.
“The introduction of the National Minimum Wage should be seen in conjunction with other components of Labour's New Deal strategy for increasing employment opportunities within the economy and reducing dependency on the welfare state”(Arguments In Favour Of The National Minimum Wage). The living expenditure is rising rapidly in every year and in the absence of minimum wage, employees will struggle to manage their family budgets properly. Governments will be forced to support employees with subsidies and incentives in the absence of minimum wage requirements. Even for the employees who are working in the private sector, governments will be forced to distribute some of its revenues to raise their standard of living. It is the duty of the employer (not the duty of the government) to help the employee in maintaining a decent living standard for the services received from him.
When the salary level increases, employees will pay more taxes and therefore the revenue for the government will be increases. Thus minimum wage will help not only the employees, but also the governments. Minimum wage will thus help the government to seize a portion of the profit from the private business groups and spend it for the wellbeing of the poor in the society. In the absence of minimum wage, the beneficiary would only be the employer and no other entities in the society will get any benefit out of the spreading of business.
Corporate social responsibility is a much talkative term in the business circles at present. It is the duty of the organizations to give something in return to the society of the resources it exploited from the society. Sustainability of a business depends on the commitment of the business towards the society. Minimum wage is one way of demonstrating corporate social responsibility.
To conclude, there is no point in arguing against minimum wages. Minimum wage helps employees to maintain a decent living standard throughout their lives. In the absence of minimum wage, only the business groups will be benefitted rather than the employees, government or the society.
“Arguments In Favour Of The National Minimum Wage”. Web. 26 September 2011.
Messerli, Joe. “Should the Minimum Wage Be Abolished?”. 2011. Web. 26