Minimum wage

Minimum wages
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There are three main aspects of life; the social aspect, the economic aspect, and the political aspect. For life to continue smoothly, all of these aspects must be observed to the latter. The economic aspect is especially very important because it deals with the very existence of the people. Among the things that civilization has brought along is the aspect of working for a wage. Employment is the driver of any economy in any country today; from the richest countries to the poorest third world country. Almost every person in the world struggles to get the best education in order to secure a job at the end of it all. Jobs are of different nature and therefore, there are different wages awarded to each and every employee, depending on the environment of the job, the qualifications and other factors. However, in each and every country, there is, or there should be a minimum wage or salary. There are many reasons as to why there should be this minimum wage. The minimum wage has been a problem in the economic sector in many countries for a long time. This essay attempts to address this issue in detail. The essay begins by providing a brief history of the topic and explaining why the issue should be addressed as a societal problem in the 21st century. In writing this essay, a lot of information has been used. The information has been got from credible sources. The sources have also been cited accordingly as per the instructed method of citation.

Basically, employment can be defined as the relationship between two or more parties, which is characterized by a contract. The party which pays for the work may either be in this contract, one party pledges to offer a kind of service while the other party pledges to pay for the work. The party which pledges to pay for the services may either be a co-operative or a corporation. Employees operate on the basis of an annual wage, an hourly wage or by piecework; depending on the nature of the work and the contract agreed upon (Du & Leigh 2017). In most agreements, employees may receive bonus payments, gratuities, and stock options. In some forms of employment, some benefits such as health and housing insurance may be included in the pay slip. Employment, in most countries, is governed by the government with laws and regulations which instruct employees and the employers on how they should operate. Employment is an age-old practice. Even in ancient civilizations, it was part of the essential aspects of the economy. Employment has always been in different forms. In ancient civilizations even slavery was a form of employment, only that the employer barely offered any wages to the slave, in fact, even in America, slavery was very rampant before the civil war. Besides being inhumane, another reason as to why slavery was banned was due to the aspect of wages. Natural human rights dictate that a person ought to be paid for any service they provide. After the end of slavery, the question of wages came into the limelight (Caliendo et al 2017). Debate on this issue gave many results.
In the April of 2013, 1, 127 workers died when a government factory in Bangladesh collapsed. In detail, this number is more than twice of that of the Americans who have been killed in shootings since 1983. This tragedy reached the public in the form of disturbing images which left even the hardest-hearted consumers thinking twice about where their clothes come from. As usual, investigations were conducted, and it was discovered that the building had been showing signs of weakness for a long time. In fact, engineers had warned that the building would collapse if no swift action was taken. The owners of the industry did not, however, give much attention to the issue. Besides poor and dangerous working conditions, it was also discovered that the employees received very low wages. Some of the employees received salaries as low as $ 0.21 per hour. This was very low compared to the United States set a minimum salary of $ 7.25 as instructed by the government. Very many workers around the world work in similar conditions as to those of the industry which collapsed in Bangladesh. Low wages are often accompanied by poor working conditions.
The Bangladesh case provided a window w of opportunity for researchers to research on wages that are offered to employees around the world, and the results were devastating. It was discovered that some countries did not even have the minimum wage Cleary spelled out. In some countries such as Saudi Arabia, it was discovered that some employees even worked for food and shelter only; which basically is a form of slavery. Third world countries were the most affected. These countries which especially had inflated economies also had the weirdest salary rates. In some African counties, some workers admitted that they received salaries of less than $ 40 in a whole month. This is barely a salary which can sustain one person, leave alone a family, for a week. The result of the research proved that there was more about minimum wages that it was thought. It was also discovered that this meager earning had an effect not only towards the economy but also to the personal morale of the employee. This effect is obviously a negative one.
Minimum wages affect the willingness of a person to work even when labor Is deducted from unemployment benefit (Dube 2017). According to researchers, wages is the main aspect that affects employee morale most. Employees who receive better pay are most likely to perform better than employees who receive lower wages. This is the same way of thinking which was applied by human rights activists during the war against slavery. Workers were likely to be more productive when they were paid than when they worked for labor. Organizations which offer the best wages are also the same organizations which are the most successful. In the same way, countries such as the United States, which ensure that works get the highest possible payment, are doing very well economically. China is another perfect example of a country that ensures works get the best wages. Notably, China is also an economic power in the 21st century.
When workers receive healthy salaries, they are empowered in that their purchasing power increases. Purchasing power is one feature that can be used to define the economy of a country. Basically, it is the purchasing power of the people in an economic society that drives the economy. For instance, many third world countries are very rich n minerals and other raw materials; like Kenya and its tea. However, Most of these products and raw materials end up being exported, instead of being consumed locally; simply because the purchasing power of the people in these countries is very low. As much as exports are a source of income, local consumption also has its own benefits (Neumar & Wascher 2015). Minimum salaries should, therefore, be set in such a way that even the lowest in the rank of the workers can manage to purchase local products in order to sustain them and support the economy. When purchasing power is high, there is also a probability that workers will invest more in the country, and improve the economy.
Interestingly, in most countries in the world, the government has laws and regulations which guide wages which workers should be paid. For instance, as mentioned earlier, the United States recommends that a salary of approximately $ 7.25 an hour (Bell & Machin 2018). As it is, the government observes these irreducible minimum requirements to the latter, for the reason that it is responsible for making laws and implementing them. The main problem comes with other nongovernmental institutions such as private corporations. In most cases, these corporations do not want to offer very high salaries so as to maximize profits. Sadly, these organizations make up for a very large percentage of the employers in many countries. Due to the fact that there is a scarcity of jobs in almost each and every country in the world, workers end up taking low paying jobs in order to be able to sustain themselves. Therefore, the very employees that these laws sought to help are contributing to breaking the laws. This shows that the solutions that have been applied are simply not working.
Governments are the main controllers of any aspect of the economy in almost all the countries of the world. The fact that nongovernmental institutions make up of a large percentage of the employers is not an excuse to let employees suffer in terms of wages. One solution that the government ought to apply is creating more jobs for the economy. This way, more workers would be in government service more than in private organizations (Gittings & Schmutte 2016). Such a situation would ensure that the private institutions revise their set salaries. With more government jobs, competition for employees would also be high in that instead or employees struggling to get jobs; employers would be struggling to get employees. More jobs would also not only be helpful in providing a solution for wages but also numerous other economic challenges that face societies and countries in general.
Researchers have concluded that governments are not keen in ensuring that laws regarding minimum wages are well observed. Most governments are good at coming up with these laws, but they rarely do the follow-up. This is partly as a result of the nature of the job market. It is hard for the government to know each and every organization and the salaries they pay their employees. As a solution to this, the government should instruct each and every organization to provide their rates periodically. This way, it would be easier to follow up. The government should also spell out harsh punishments to employees who offer salaries less than the set wage. In fact, such a crime should be classified as a crime against humanity, since it abuses human rights.
Civic education is also very important in ensuring that any law is implemented. In a case such as wages for instance, whereby individual citizens are involved, it is very important to let people beware of their rights. In some cases, employees take jobs which pay way below the spelled out salaries without their knowledge. This is most evident in low profile jobs such as attendants in roadside stalls. It is very important that such employees are taught about their rights. Another group of employees agrees to take jobs regardless of being aware that the job pays way below the required wage. This particular group of employees should be taught about the importance of being strict on their rights. They should not let anybody exploit them in any way, especially in matters which deal with their financial security and upkeep.
In most cases, low wages mostly affect the poor, less educated and the low class in the society. For instance, it is normal to find a lowly paid bar attendant, but very rare to find an underpaid doctor. This is the reason why economists have predicted that the poor in the society will continue being poor as the assets of the rich continue to expand. It is the same reason that poor ghetto settlements are very hard to eradicate. When a poor man, who is a father, agrees to take a job which pays very little, he limits his financial freedom. This is reflected his family. In some cases, priorities might dictate that education for the children be overlooked in order to meet other basic needs such as clothing, food, and shelter. This cycle goes on and on, and families end up being poor for generations and generations. To solve this, the government should find a way of reducing taxes for the poor and passing laws that ensure the poor and the low class get higher salaries. In fact, most of the resources towards this should be directed to the poor and the low class in the society. A balanced economy is an ideal economy for any country.
Education may not be necessarily the prime key to success, but it opens doors for many things. As mentioned, it is very rare to come across an underpaid doctor. The educated in the society receive the highest wages. Therefore, as a solution to minimum wages, the government should pull more resources into education. The focus should be directed especially to areas of low income. With education, the employees increase their chances of getting better-paying jobs. As a matter of fact, the most informed people in the society are rarely exploited.
Private corporations usually operate considering the factors that surround them. For instance, these institutions look at the external environment before making key decisions in their operations. This explains why cloth making industries have historically been associated with low offering poor working conditions and low wages (Jardim, 2017). This culture should be eradicated. Governments should point out the most affected industries in low wages and follow up. This is in order to curb the spread because basically, most companies consider the wage rates of other organizations which are in competition in order to spell out their own salaries. This step would, therefore, be solving a problem from the grass root.
Economies normally fluctuate from time to time. Economists have confirmed that the living conditions in the world today continue to get more and more expensive. Therefore, in a bid to keep with the rising cost of living, salaries and wages should be constantly revised. For instance, there are countries which offer a rise in salary for every employee on a yearly basis. This is a very good step in ensuring that employees keep up with the rising cost of living. It is also a solution towards ensuring that workers are not exploited. Notably, the government should ensure that employees in the private sector also enjoy these benefits, in order to ensure that there is a balance.
Taxes are a major contributor to aspects which affect the economy. Each and every institution that operates with the intention of making profits is entitled to pay some amounts in tax to the government (Neumark 2017). This amount affects very much the decisions of the company or the institution. Therefore, it is a contributing factor to the salaries that individual companies offer to their employees. The government, being the controller of taxes should, therefore, find a way of ensuring that these taxes do not have a negative influence on wages. Notably, small organizations are the ones that are most affected by taxes (Fang & Lin 2015). Coincidentally, these same organizations have a reputation of offering the lowest wages to employees. As a solution, the government should work towards reducing taxes for smaller organizations and doing the opposite for larger organizations in order to compensate. Larger organizations generally are more established and are therefore very able when it comes to paying taxes. This step also ensures that smaller organizations are given a chance to expand and grow. As they grow, so does their wages. This solution is very applicable in countries which are more established economically such as the United States and China.
There are countries which have already started to address the challenge of wages. The United States, for instance, has set up a plan which will be executed in phases until 2021. The ‘raise the wage bill,’ which was recently passed into law, will gradually increase the subminimum wage which has been frozen for a long time. This way, by 2021, the United States workers will be the best-paid workers in the world. Other countries should feel free to emulate the United States. The problem of wages is a global problem, and therefore a solution that works for one country can be applied in another country.
Being a global problem, there is need that a global solution is applied. However, it would be difficult to bring together the business community of the whole world together. More so, due to differences in economic backgrounds of different countries, uniformity might be hard to achieve. Therefore, the best thing would be to bring together business communities in the same geographic areas. For instance, European Union might be a good business division to apply the same rules. Depending on the economic environment, the business communities should decide on the minimum wage, having considered all factors. Agreements on how increment of salaries should be done should also be done. This is to avoid inequality and exploitation.
Low wages are the main cause of poverty in the society today. Solving this problem, therefore, means eradicating poverty. In this century, poverty should not be as rampant as it is. There is a program called guaranteed basic income program. This program is a supplement to the challenge of low wages and a solution to poverty today (Cantillon et al. 2015). A guaranteed basic income project, which can also be referred to as a universal income program generally means that the government provides a general income for any citizen who is an adult. Before Libya collapsed, this system had proven to be very applicable. It had led Libya to become the richest country in Africa and even richer than some European countries. The United States has also shown interests in the same. In this program, the government provides an income to citizens regardless of whether they are working or not. Economists have supported this program, saying that it is the best supplement to low wages.
Unknown to many, the problem of minimum m wage has been getting worse day by day. The United States, which is the world’s economic powerhouse, is one victim of this situation. In 2014, economists confirmed that the minimum wage was 24% below the 1968 level even though US productivity had obviously gone up in more than double in those years. Interestingly, almost 90% of the employees are 20 years and above and have a college education. Of these, over 45% are supporting children. Endangering their income is, therefore, endangering the future of America and the future of the world in general. Therefore, caution should be taken. On average, more than 40% of the world’s population is living below the poverty line. Much of this is due to low wages because these people are employed. The wages should be revised in such a way that anybody who is working on any job should be able to sustain themselves and their families. It is not right for an individual to spent most of their lives studying in school only to end up being underpaid and in debt for the rest of their lives.
Conclusively, wages are very important in the economy. Any economy that is ambitious of becoming powerful should focus on ensuring that its workers are well paid. This way, the citizens, who are basically the consumers, are able to take part in building the economy, through their purchasing power. When workers are paid well, it also gives them an opportunity to become innovative. This innovativeness enables them to invest in the country and continue to grow the economy by increasing the GDP and creating more jobs. The issue of wages has been discussed for a long time, and finally, many countries are seeing the need to improve the minimum wages for their workforce. The main challenge comes with private institutions, which are reluctant to pay more in order to avoid minimizing their profits. These institutions should face the full force and wrath of the law. This is because the solutions that governments are providing are cannot be applicable to the input of the government alone. It is very important to finally note that the best economies are the economies that are paying their workers the best. For instance, the united states have one of the best economies. Coincidentally, it is also a country that makes sure that its employees are paid very well.
References
Cantillon, B., Collado, D., & Van Mechelen, N. (2015). The end of decent social protection for the poor? The dynamics of low wages, minimum income packages, and median household incomes.
Fang, T., & Lin, C. (2015). Minimum wages and employment in China. IZA Journal of Labor Policy, 4(1), 22.
Jardim, E., Long, M. C., Plotnick, R., Van Inwegen, E., Vigdor, J., & Wething, H. (2017). Minimum wage increases, wages, and low-wage employment: Evidence from Seattle (No. w23532). National Bureau of Economic Research.
Gittings, R. K., & Schmutte, I. M. (2016). Getting handcuffs on an octopus: Minimum wages, employment, and turnover. ILR Review, 69(5), 1133-1170.
Bell, B., & Machin, S. (2018). Minimum wages and firm value. Journal of Labor Economics, 36(1), 159-195.
Neumark, D., & Wascher, W. (2015). The effects of minimum wages on employment. FRBSF Economic Letter, 2015, 37.
Du, J., & Leigh, J. P. (2017). Effects of Minimum Wages on Absence from Work Due to Illness. The BE Journal of Economic Analysis & Policy.
Neumark, D. (2017). The Employment Effects of Minimum Wages: Some Questions We Need to Answer (No. w23584). National Bureau of Economic Research.
Dube, A. (2017). Minimum wages and the distribution of family incomes.
Caliendo, M., Fedorets, A., Preuss, M., Schröder, C., & Wittbrodt, L. (2017). Evaluating the Minimum Wage in Germany: Regional Variation in Wages, Bite Measurement and Short-Term Effect on Employment. mimeo (2017b)‘The Distributional Effects of the German Minimum Wage Reform.’mimeo.