vendredi 17 janvier 2014

Benefits And Shortcomings Of Minimum Wage Laws

By Marissa Velazquez


Without doing an in-depth analysis, it always seems that making more cash comes with only advantages and no shortcomings. Many people are however of the belief that making more money is recipe for bigger problems. This is what forms the basis of the debate around minimum wage laws. Most governments look to enact laws that legally guarantee that workers will be paid some minimum income, irrespective of where they work. From the point of view of the worker, being paid minimum income has significant benefits. However, there are a number of drawbacks as well.

The biggest benefit is the increased incomes that most workers will get. Workers will be entitled to certain minimum wages that are not in any way dependent on what companies, businesses and other employers believe they should be paying. Failure to have this minimum amount will encourage employers to take advantage and pay workers money they cannot survive with adequately. This is more so in places with few jobs and thus individuals have no alternative but to embrace the available jobs irrespective of pay.

Inasmuch as there are no jobs that guarantee 100 percent security, employees are able to draw some security from these laws which guarantee them considerably higher earnings. As long as they hold such jobs, they will know how much they are supposed to earn. Any form of uncertainty is kept away as a result.

Proponents of these laws believe that if such regulations were not set, there is the probability of workers being exposed to anticipated and sudden drop in wages. In this way, they will find themselves out of their jobs after a while. Beyond that, they will not be able to live off just a single job- they will have to get several jobs.

Investments are an important aspect for the employed. However, the only way one would be able to do so is when they have an assured income and stable jobs. Thus from the perspective of the worker, investment becomes an achievable dream when jobs are stable and income considerable. As concerns businesses, they will invest more in productivity of workers. In other words, if businesses have to pay more for their employees, it will serve them more to train, insure and care for the employee.

From a macroeconomic level, minimum wage laws could be hurting to workers. When companies and businesses are made to abide by certain regulations bordering on wages, a number of them may be forced to pay more than they can actually afford. They will thus be forced to downsize on the number of employees as the only way to stay profitable. Some employees will be laid off and there will be fewer jobs eventually.

When companies are forced to pay incomes they cannot comfortably afford, they will resort to outsourcing for labor. This they do from other countries. Such labor is cheaper and thus affordable to them. Further, when wages are hiked, firms will look to compensate for the cost of keeping their workers in employment at minimum wages.

With minimum wage laws therefore, workers are set to gain a great deal. Among the big losers however are small scale businesses and companies. They have to trim on their employees to keep afloat.




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