College Essay Tips on Pros and Cons of Minimum Wage

The minimum wage is the lowest legal wage that companies pay to their clients. Many cities and states have their standard minimum wage. The U.S current low wage rate is about $7.25 per hour. Employers receive which one is higher, either federal or local minimum wage.

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The Main Purpose of the Minimum Wage:

One of the biggest purposes of the minimum wage is to stop employers from exploiting desperate workers. It should help to afford enough income for a living wage. That is the basic amount needed to provide food, shelter, and clothing.

The discussion regarding the need for minimum wages is a topic that comes up with debate in talk shows and also in a political context. Minimum wages also have many pros. But there are also some cons associated with them.

In this article, we are going to list down the pros and cons of the minimum wage in detail.

Pros:

More chances to get out of poverty
Lower the risks of conflicts
Increase GDP and overall consumption
Reduce government spending on welfare
Lessen the discrimination of minorities
Improvements in the health sector
The motivation of workers also increase
Employees prefer to stay in the company for a long time
Better opportunities for children of low-income families
Eradication of income inequality

More Chances to Get out of Poverty:

If the minimum wage scheme is implemented properly, it would be a great way to get people out of poverty. Many people who are working in low wage jobs will have to spend almost their whole money in their daily life and will not be able to save much.

So, investing and saving money is very important to get out of poverty. Thus it is very crucial to introduce minimum wage so that people can save and invest more to achieve a better financial situation in the future.

Lower the Risks of Conflicts:

Differences in wealth and wage levels often lead to serious conflicts. People are anxious and want to have better lives as they can. Like if you see your neighbour driving a nice car, the chances are that you wish for the same one.

Through minimum wages, you can earn sufficient money to buy a car, and your level of desiring for that one will be lower as compared to the previous situation.

Thus, countries with a high level of economic inequality minimum wages may lower the social tension between people.

Improvements in the Health Sector:

Many studies have shown that our health conditions greatly depend on our financial conditions. For example, if you are sick, you will be able to afford the best medical treatment in case of being wealthy.

In this way, the chance of suffering from severe health issues is less as compared one having low financial support. Thus, introducing minimum wages helps to improve the health conditions of millions of people significantly.

The Motivation of Workers Also Increases:

In general, the motivational level of workers will increase if they can earn more money from their jobs.

Especially people who work in low wage jobs, an increase in salaries is quite significant. These people often need every dollar to buy food and to provide housing for their families.

If people can afford more money after introducing minimum wages, people may have a higher motivation level to go to work and to communicate better with the company.

The Motivation of Workers Also Increases:

Recent studies have shown that changes in the life of a child are significantly dependent on the wealth and income of a family.

If you belong to a wealthy family, then your parents can easily afford your study expenses or even can hire a private tutor for you. In this way chancing of graduating from a good university increases and at last, you will get a good job also.

But unfortunately, if you grow up in a low-income family, then you and these opportunities would stick in poverty. So raising minimum wages will be beneficial for children of low-income families to get a better education and living facilities.

Employees Prefer to Stay in the Company for a Long Time:

If they can earn more money, employers will like to stay in the company for a long time. If the working conditions in the company are hard to bear and barely able to survive from low wages, the chances are that they will quit their jobs at the end.

Cons of the Minimum Wage:

It’s time to switch towards the cons of the minimum wage.

Outsourcing work to foreign countries
Trap people suffering from poverty
Potential losses in available jobs
Higher chances of unemployment
Against the fundamental right of freedom
Machines replace workers
Efficiency depends on the implementation
Less flexibility in hard times for firms

Outsourcing Work to Foreign Countries:

Companies could outsource their jobs to foreign countries that don’t have minimum wages to reduce the cost of labourers. This is helpful for large multinational companies who have the infrastructure to outsource more jobs if required.

So, the introduction of minimum wages may lead to local job losses since companies might decide to outsource their processes to foreign low wage countries.

Trap People Suffering from Poverty:

Some people start their career jobs that pay quite low wages, but after having a great job, they may be promoted and earn much more.

So, if people no longer work for a low wage, they might not get a chance to enter the job market and remain trapped in poverty. Thus minimum wages may trap some people instead of improving their financial conditions.

Machines Replace Workers:

As marginal costs of labour increase after the introduction of minimum wages, firms get an incentive to lay off their workers and to replace them with robots instead.

This is especially for standardized jobs. Moreover, these jobs could be easily outsourced to machines, and more people become unemployed due to this shortly.

Higher Chances of Unemployment:

The increase in labour costs also implies an increase in unemployment as firms got greater incentive to lay off their workers. So an increase in minimum wages could improve the conditions of many workers, but it results in the loss of jobs, and overall situations get worse.

Conclusion:

Although there are many pros of minimum wage cons due to its implementation also needs to be considered.

The Main Purpose of the Minimum Wage: