How Would the Cancellation of Minimum Salary Affect the Economy of Your Country?
Introduction: The Significance of Minimum Wage for the Economy
To begin with, it has to be said that the minimum wage has a significant effect on the economy of the country. Thus, its cancellation would cause some consequences. They are concentrated on the fact that the economic situation of the country is unstable due to a lot of factors of the macro and microenvironment such as inflation, unemployment rate, the exchange rate fluctuation, etc. All of these factors have a significant impact on the economy of the country. Therefore, the absence of the minimum wage might become a result of these factors’ influence. It must be underlined that a lot of experts have the opinion about the companies’ responsibility for understanding the significance of their employees’ welfare. The companies have to ensure that their workers have enough to have a minimum life. However, some of the experts state the opposite opinion about the effect of the minimum wage. They claim that the real effect is based on protecting the taxpayers from the firms’ eagerness to have the labor resources free of charge, not paying them their salary. Therefore, it is a dilemma: should the government increase or decrease the minimum wage for the employees and how this can affect the economy of the country?
Positive and Negative Effects of Minimum Wage on the Economy
Moreover, the second question of the topic is focused on the fact that the cancellation of the minimum wage might change the economic situation of the country. Thus, the problem is: would the absence of minimum wage affect the economy of the country and what the consequences are? These are the questions the paper is going to answer further.
First of all, it must be pointed out that there are positive and negative effects of the minimum wage influence on the economy of the country. On the one hand, the experts state that “If a firm can’t pay its workers enough to live on, then it isn’t a viable business because it is dependent on wage subsidies” (Coppola 1). It is understandable that the minimum to live means the location whether the person lives. For example, if it is New York the minimum standard will be much higher than it is, for instance, in New Orlean. Thus, the person who lives in New York will starve at the level of minimum wage while the person from New Orlean will live at the average level or even be wealthy. Therefore, even within the same country, there are different living standards for various cities especially it concerns the megapolises.
On the contrary, the minimum wage has a crucial role in the economy of the country because it creates not the workplaces, but it protects taxpayers from the companies’ eagerness to pay nothing for the labor force. That is why the minimum wage is a necessary element of each of the economies of countries. Moreover, it should be admitted that “If there is no minimum wage, therefore, then the co-existence of unemployment with in-work benefits drives down wages to below subsistence level” (Coppola 1). Thus, unskilled employees become the employees of the country because the government tax income is the result of households and not companies. Therefore, all of this leads to skilled employees who have to pay their taxes for the unskilled employees. As it can be noticed, in-work benefits are not useful in a case of stable unemployment. This creates the rising taxes and the shift of the paying taxes by skilled employees instead of unskilled.
Low-Income Families and Minimum Wage
Secondly, it has to be highlighted that the significant reason for having the minimum wage is that it helps low-income families. However, minimum wage creates those who win the battle and those who lost it. For example, the winners have the fee that accompanies with no decrease in the job while the losers might lose their job. Moreover, according to the research, the minimum wage might even increase the number of poor people in the country. Thus, the author of the article states that “The fundamental problem with using minimum wages to increase the incomes of poor and low-income families is that the policy targets low-wage workers, not low-income families, which are not necessarily the same” (Neumark 1). The article states that if the minimum wage foundation is spread equally among all of the low-wage workers, poor households would own only 13%, while half would go to the top half of the income distribution (Neumark 1).
Furthermore, the author of the article “Employment effects of minimum wages” claims that minimum wage cancellation has much more significance than the minimum wage presence because a higher minimum wage creates the dissonance among the low-skill employees and high-skill ones. Employers are eager to employ the high-skill workers because there is a high minimum wage instead of offering the working places to low-skill workers. Moreover, he thinks that the minimum wage creates a significant level of unemployment among low-skill workers. Furthermore, the minimum wage reduces the number of low-income families help. These families have to be helped while the minimum wage often has been directed to the low-wage workers instead of families. Thus, Neumark is sure that the minimum wage policy has no impact on helping the poor and votes for its cancellation.
Minimum Wage Policy Issues
Thirdly, it must be underlined that the U.S. debates of having the minimum wage concern the whole country. Recently, Teresa Tritch emphasized that “the absence of a state level minimum wage is a vestige of slavery” (Worstall 1). Moreover, she stated that “Five states don’t have a state-level minimum wage, those five are all in the south, are all formerly Confederate states; therefore there’s the connection with slavery!” (Worstall 1) It is rather exciting to observe the arguments for and against and the political debates that help understand the “In vino veritas.” However, it is understandable that slavery does not mean the cancellation or absence of minimum wage. This is not an appropriate word to use here. And thus, it has to be underlined that Tritch is not right when combines these two terms. She should read the macroeconomic principles of minimum wage influence. Firstly, if the government sets the minimum wage, it means that companies are not allowed to set the amount less than the governmental one. Secondly, there are two consequences of setting a minimum wage. The first one is focused on the number of people hired in market decreases. Thus, the employment is decreasing its level. And the second one is concentrated on the fact that “At the government-imposed wage, more people want to work than are able to find jobs. Thus, the minimum wage has created unemployment” (Robinson 1). Therefore, two different consequences are the opposite of its meaning.
Moreover, it should be highlighted that according to the article “Minimum wage – does it cut poverty?”, three conditions have to be met in case the minimum wage should have the positive effect of the working conditions. Firstly, “Most workers are entitled to receive at least the minimum wage in exchange for their work. No workers or very few workers lose their jobs because of the minimum wage” (Saget 113). The second one is that “Employers comply with the minimum wage” (Saget 113). The author of the article states that the employers are told to how they should act in the process of fixing the minimum wage. And thirdly, “There is no increase in prices following the rise in the minimum wage” (Saget 113). The last is hard to control because inflation often takes place when there is an increase of in the minimum wage. It has always been the governmental policy of each of the countries.
Consequences of Minimum Wage: Statistical Data
Also, it has to be pointed out that there is a lot of statistical information that proves either a positive or negative consequence of the minimum wage impact on the economy of the country. For example, the author of the article suggests that the negative effects of the minimum wage are focused on teen employment while, on the contrary, some experts claim the insignificance of the statistical information of the job. “At the same time, most empirical papers to date have examined the effect of minimum wages changes on the employment of a particular group (teenage workers, restaurant workers) by estimating state- or county-level regressions” (Cengiz, Doruk et al. 1). Furthermore, it must be admitted that there are another opinions that suggest the cancellation and absence of the “minimum wage, wage subsidies and transfers to low-income households that phase out in a way that does not tax small increases in income at absurdly punitive rates” (The law of demand is a bummer 1). The author of the article claims that the focus should be switched to low-income households instead of the minimum wage that cannot be converted into a real-life experience. Minimum wage creates more problems in inequality than solves them, according to the article.
Debates on Minimum Wage at State Level
Moreover, it has to be stated that the opinions differ. And thus, the positive and negative aspects of the minimum wage cancellation or absence are arguably and statistically proven by both of the sides. Furthermore, finding the point of the intersection of these opinions is the core task for both of the side of the dispute because setting the minimum wage will always have its positive and negative influence. Thus, instead of fighting each of the sides and opinions, the actions should be done to find the best alternative for the economic development of the country.
Moreover, it must be highlighted that nowadays the governments force to work the unemployed while at the same time this work might be poorly paid. They push all of the people to go to seek the job that is to their taste. As a result, this action means the ruination of people’s understanding of the market, and their choice is limited. Therefore, all of this leads to reducing wages. Thus, fees are going to become lower because unemployed have no opportunity not to work. Finally, it should be mentioned that according to the author of the article “Why We Need A Minimum Wage,” Frances Coppola prefers to give people a choice between work and rest. He would be glad if he could see the end of “refusing the jobs, the elimination of workfare schemes, and the provision of a basic income replacing both in-work and out-of-work benefits” (Coppola 1). However, nowadays this kind of situation is impossible due to political factors. Thus, the minimum wage level should be established in the country’s economy. This will be crucial for the fiscal letter of the law.
Moreover, there is a difference between the low-paid workers and unemployed. And the low-paid workers do not like when the unemployed earn the same amount of money as the low-paid ones. Therefore, the dilemma occurs. How to build the economy the way it will be right and suitable for the majority of people? The low-paid workers should be paid according to the working hours and the specifics of the job they have while the unemployed should gain the amount of money that is lower than the low-paid workers gain. It will be fair towards the low-paid workers because they earn their wage by blood, sweat, and tears. At the same time, unemployed have chosen the leisure activities. And thus, they should be paid less than those who work even if it is the low level of wage. This is the economic development that the government should consider in deciding for the country’s citizens.
Conclusion
To conclude, it has to be said that the minimum wage has a crucial effect on the economy of the country. Therefore, its cancellation would cause some consequences. They are concentrated on the fact that the economic situation of the country is unstable due to a lot of factors of the macro and microenvironment such as inflation, unemployment rate, the exchange rate fluctuation, etc. Moreover, the cancellation of the minimum wage might change the economic situation of the country. And thus, there are positive and negative effects of the minimum wage influence on the economy of the country. Unskilled employees become the employees of the state because the government tax income is the result of households and not companies. Therefore, all of this leads to skilled employees who have to pay their taxes for the unskilled employees.
Furthermore, the significant reason for having the minimum wage is that it helps low-income families. However, minimum wage creates those who win the battle and those who lost it. For example, the winners have the wage that accompanies with no decrease in the job while the losers might lose their job. Minimum wage reduces the number of low-income families help. These families have to be helped while the minimum wage often has been directed to the low-wage workers instead of families. Thus, Neumark is sure that the minimum wage policy has no impact on helping the poor and votes for its cancellation.
Nevertheless, it is understandable that slavery does not mean the cancellation or absence of minimum wage. This is not an appropriate word to use here. There is a lot of statistical information that proves either a positive or negative consequence of the minimum wage impact on the economy of the country. Minimum wage creates more problems in inequality than solves them, according to the article. As a result, nowadays the governments force to work the unemployed while at the same time this work might be poorly paid. They push all of the people to go to seek the job that is to their taste. Finally, there is a difference between the low-paid workers and unemployed. The low-paid workers do not like when the unemployed earn the same amount of money as the low-paid ones. And thus, considering all of the mentioned above, the cancellation or absence of minimum wage affects the economy of the country much.
Works Cited
“The law of demand is a bummer.” The Economist, 2013, www.economist.com/blogs/democracyinamerica/2013/02/minimum-wage. Accessed 24 Sept. 2017.
Cengiz, Doruk et al. The Effect Of Minimum Wages On The Total Number Of Jobs: Evidence From The United States Using A Bunching Estimatorú. 2017, http://www.sole-jole.org/17722.pdf.
Saget, Catherine. Minimum Wage – Does It Cut Poverty?. Web. 24 Sept. 2017.
Coppola, Frances. “Why We Need A Minimum Wage.” Forbes, 2014, www.forbes.com/sites/francescoppola/2014/01/13/why-we-need-a-minimum-wage/#7ada34d2380b. Accessed 24 Sept. 2017.
Neumark, David. Employment effects of minimum wages. 2012, wol.iza.org/articles/employment-effects-of-minimum-wages/long. Accessed 24 Sept. 2017.
Robinson, Joan. The Pure Theory of International Trade. Oxford: Basil Blackwell, 1966.
Worstall, Tim. “Not Having A State Minimum Wage Is Not A Vestige Of Slavery.” Forbes, 2015, www.forbes.com/sites/timworstall/2015/06/26/not-having-a-state-minimum-wage-is-not-a-vestige-of-slavery/#2473c5531423. Accessed 24 Sept. 2017.
