The Minimum Wage
The issue of the minimum wage has been widely discussed and debated by policymakers and economists for years. Several questions are kept pending and unanswered regarding the impact of minimum wage on employees and employers. Some argue that the minimum wage helps reduce income inequality and poverty, while others say the laws binding the minimum wage have several negative consequences. The negative impacts of minimum wage include reduced hours for employees, higher prices charged to consumers of goods and services, and reduced employment opportunities. As an economist, I am against the minimum wage legislation. Therefore, this essay will argue why the minimum wage legislation should be removed and other legislation that does not hurt the people be put in place.
A minimum wage may hurt the people it intends to help because of the increased labor costs. Employers may see it difficult to employ or recruit more workers because of the expensive labor costs that increase the firm’s operational expenses. Consequently, the employers may lay off some workers to meet the company’s needs of reducing operations costs to maximize profits. The low-income workers may suffer from the minimum wage rates because they mainly rely on goods and services offered by firms. If the companies are exposed to minimum wage rates, they increase the prices of goods and services to cover the increased labor cost, hurting low-income workers by exposing them to expensive goods and services (Li & Lin, 2020). Firms may also decide to outsource and automate their operations to reduce and escape the negative impact of minimum wage laws. Employers can move their operations to countries with lower labor costs or heavily invest in technology. While the minimum wage laws intend to help to improve the living standards of workers or employees, the outsourcing of companies may make these employers lose jobs.
Considering the negative consequences of minimum wage rates, it is economically right to argue that they should be removed to avoid hurting the people policymakers intend to help. For example, employers may decide to reduce the number of workers in their companies, which may increase the amount of worker did by available workers (Li & Lin, 2020). The increased unemployment rate can also lead to many criminal activities as job seekers try to find their way to survive. Moreover, the low recruitment rates by employers make many young people jobless because of the few employment opportunities available in the job market. Companies with low minimum wage margins are highly affected by the minimum wage legislation because they mostly tend to increase the prices of consumers. A good example is food restaurants that increase prices to cater to employees’ salaries.
On the other hand, the minimum wage legislation can be helpful to workers. It helps in reducing employee exploitation by paying them low wages. Since minimum wage means the least wage an employee can receive from the employers, the employees who previously had been paid lower wages may have an advantage because they receive increased wages. Consequently, the employees may enjoy improved living standards (Jayaram, 2019). Moreover, the industries that have heavily on technology have not affected the laws regarding the minimum wage rates because they depend on technology more than the workers. Therefore, the minimum wage rates ensure that workers receive fair salaries and are not exploited by employers. The workers below the poverty line are positively affected by the minimum wage rates because raising the minimum wage rates improves their salary and living standards. Without the minimum wage rates laws, employers may take advantage of employees by paying them low wages and enjoy huge profits and benefits because of the cheap labor they receive from the workers (Jayaram, 2019). Moreover, employers may deny the workers minimum benefits, exploiting them and exposing them to poverty. Minimum wage rates regulate such activities and give the workers the advantage of high salaries.
In a nutshell, the minimum wage rates have both negative and positive impacts depending on when and where they are applied. I refuse to support the minimum wage rate regulations because the disadvantages outweigh the benefits. The legislation of minimum wage rates is a complex issue that needs economic evaluation and consideration of the negative consequences and positive impacts it may have on employers and employees. Although imposing minimum wage rates may improve the living standards of the lower income employee earners, it may also hurt the people it intends to help. The reduced employment opportunities may lead to increased criminal activities in the race to satisfy the wants. The companies may also shift to countries with cheap labor, leaving many people jobless. Moreover, employers may increase the prices of goods and services, and consumers face the impact of higher prices hence the reduced living standards. Therefore, it is better to consider the resulting consequences before opting for minimum wage rates legislation.
Labor Unions
The impact of labor unions on workers has been debated for many years by economists worldwide. The associations are made through a process that involves different acts to regulate how workers operate and how events are done. Labor unions are formed when workers come together with the employers in collective bargaining to agree on the working conditions, wages, and working experience that the workers deserve. In every country, labor unions exist to represent and fight for workers’ rights. This essay will discuss how labor unions can be viewed as unjust and immoral, if labor unions help or hinder employees, how some industries have high wages without using unions, and my take on labor unions.
Labor unions can be viewed as unjust and immoral. This is because, sometimes, the unions may engage in illegal strikes where they do not engage both parties in coming up with solutions to the challenges facing workers. For example, labor unions always favor the workers but not the employer. When the workers strike, their productivity rate is reduced, and they are more likely to be paid even without working. Also, labor unions can cause inflation by limiting the competition rate in the market for certain commodities. This occurs when labor unions do not support a company’s operations (Sony, 2020). These companies may be given hard terms and conditions that limit their operations, thus making the existing producer a monopoly. Finally, the labor unions are poorly represented, and some people benefit more than others. For example, politicians control the labor unions and do not represent the workers well. They introduce corruption activities where the employers take advantage to oppress the workers because their leadership is not strong.
Labor unions may help and hinder employees at the same time. To start with how it helps employees, the labor unions represent the employees’ voice. Therefore, some of the advantages that the employees get when the labor unions are involved may include collective bargaining power, better wages, good working environment, and the problems of discrimination are also addressed (Sony, 2020). On the other hand, labor unions hinder employees in different ways. For example, these unions need money for their daily operations, which the workers provide. Therefore, workers have deducted their wages which go to the labor unions. Additionally, the flexibility of the workers in bargaining for their rights and wages is limited by the labor unions. Workers cannot face the management or the employer when they need an issue to be addressed because the union represents them.
Many industries have high wages without the involvement of labor unions. These industries include banking, finance, insurance, and also technology. One of the reasons why the salaries are high is that these industries need workers with high-quality skills, which are rare and in demand. The services this worker offers are complex, and industries cannot survive without them. To get the skills required in such sectors, one must spend a lot of money to train, which is one of the determinants of the wages to be paid (Hafinah, 2020). The higher the cost of education, the higher the wages, and vice versa. Therefore, employers are forced to pay these workers regardless of their demands. Additionally, with the rise of technology and its demand, people with the skills and knowledge to work in high-tech industries are highly demanded, and companies are willing to pay the required salary.
I am in favor of economic unions. From my point of view, labor unions perform essential functions that cannot be ignored. For example, protecting workers and their rights is not simple. Sometimes a lot of time is spent in the process of making negations that benefit the employees. Another benefit that occurs due to the existence of the labor union is the reduction of the gap between high and low-paid workers. By bringing the workers together to an agreement, unity and democracy are achieved (Sony, 2020). The labor unions ensure a fair distribution of wages and that every worker represented by the union is satisfied, motivated, and has the morale to work and be more productive. Also, the working environment and the operating hours are regulated with the labor unions’ help, which is an advantage to both parties involved.
In a nutshell, labor unions act more in favor of the workers than the employer and workers may suffer in absence of the labor unions. The workers’ advantages include better wages, a better working environment, balanced and fair payment, and regulated working hours so that the employer does not oppress the workers. Considering the discussion, this paper has explained how labor unions can be viewed as unjust and immoral, if labor unions help or hinder employees, how some industries have high wages without using unions, and my take on labor unions.
References
Hanifah, I. (2020). Standardization effort of labor wage to increase to improve labor: standardization effort of labor wage to increase to improve labor. kumpulan berkas kepangkatan dosen.
Jayaram, N. (2019). Protection of Workers’ Wages in India: An Analysis of the Labour Code on Wages, 2019. Development, 55(3), 401-19.
Li, S., & Lin, C. (Eds.). (2020). Minimum Wages in China: Evolution, Legislation, and Effects. Springer Nature.
Sony, M. (2020). Pros and cons of implementing Industry 4.0 for the organizations: a review and synthesis of evidence. Production & Manufacturing Research, 8(1), 244-272.
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