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Pros and Cons of the Minimum Wage: An Essay

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Minimum wage is one amongst various political-economic system policies that serve to correct imbalance in the economy. It is defined as the lowest amount of remuneration required by an employer to pay his/her employees during a given time. The minimum wage principle is a controversial issue that many people have strong opinions about. This constant debate has everyone questioning whether or not it should be raised depends upon on a couple of factors, such as the living conditions of the lower class, the impact on jobs which can be induced by the means of a surplus of labor, moreover it can affect the quality of an economy’s human capital.

First of all, the minimum wage prevents the lower class from living a life of comfort. Americans believe in the three-class model of which included the upper class, the middle class, and the lower class. Social class refers to the grouping of individuals in a visible hierarchy supported by wealth, income, education, employment, and social networking. One’s role within the social hierarchy may additionally have an impact on health, family life, and education (Lumen). It’s clear that socioeconomic status (SES) refers to a person’s function in a hierarchy and is tied to explicit opportunities and resources. The upper class is defined as the ‘top layer’ or the best possible in the socioeconomic bracket, these are the ones with outstanding wealth and power. The lower class are those within the lowest socioeconomic bracket who have low education, low-income, and status. As for the middle class who lies in between these two classes. Membership in a particular social class is based on educational and career accomplishments (Lumen). Research suggests that adolescents from low SES households and communities enhance academic skills slower than adolescents from higher SES groups (American Psychological Association). The school systems in low SES communities are occasionally under-resourced, which negatively affects the students’ academic development and outcomes. A study showed that individuals from a lower social class generally had less career-related self-efficacy once it came to job aspirations (Ali, McWhirter, Chronister, 2005). Children who have access to superior facilities in an economic system have higher accumulate for training employees. The federal minimum wage (FMW) used to stabilize working individual incomes by helping them manage to pay for their housing (McCaskey). The FMW no longer pays employees enough to meet the expenses of housing and utilities of minimal wage-earning households in most areas of our country (McCaskey). Many states have attempted to overturn the Affordable Care Act, due to the lack of reasonable health care medical bills that could wipe out a family’s saving and place them on the street (McCaskey). That’s an impossible war for somebody who’s earning the minimum wage to win. The proposed increase would only marginally improve the lives of minimum wage earners (Karabell).

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Second of all, the minimum wage can cause a surplus of labor, which consequently can create more unemployment. Surplus labor is the additional labor created by an employee for his/her employer, to be placed towards capital accumulation (Marx). To stay employed the employee should do that work, however, he/she will gain nothing by doing it. By serving to the buildup of the capital, the employee contributes to the cycle of mechanization and division of labor, that permits for fewer works to do more work, therefore adding to the competition between staff, and lowering wages (Marx). The minimum wage is a good example of how price floors can harm the people who are supposed to be helped by undermining economic cooperation. Laws of the minimum wage are often viewed as an impactful means of raising low-wage workers. Sadly, it, like a price floor, creates a surplus. During this case, it’s a surplus of workers, additional of whom are willing to work in minimum wage jobs than employers are willing to hire at that wage. A wage floor hits workers with limited skills, primarily young individuals who are best able to improve their economic prospects by developing skills that increase their productivity. The simplest hope for those with the fewest benefits is work experience and on the job training. The minimum wage reduces the number of individuals employers will hire for what is primarily training. A young person from a higher-class family can easily expect to have connections that make it possible for him/her to get a minimum wage job before heading off to college, or a part-time minimum wage job while in school. The poor kid whose education in an inner-city public school makes going to college unlikely, and whose best hope for gaining skills is job experience, is less likely to get a minimum wage job. Being born in a particular social class can bring advantages and disadvantages because it increases the likelihood that an adult will remain in the social class that they were born into. Raising the minimum wage threatens to reduce employees working hours as well as job opportunities. Those in an economic condition won’t gain as much and raising the minimum wages for those in the lower class and not working isn’t useful and doesn’t help anyone. Raising the minimum wage creates a reduction in the level of employment because keeping employees cost more money. However, there’s no solid proof that a higher minimum wage costs jobs and research shows it raises incomes for low-wage workers and boosts short-run economic growth (Lee). A series of recent studies on the minimum wage purport to indicate a low or non-existent impact on unemployment (Syrios). In essence, an increase in the minimum wage makes it more likely that companies won’t hire new individuals instead they will fire current employees. For example, movie theaters have stopped employing attendants almost entirely. Instead, many companies are moving toward more automation, at least partly because of the minimum wage increase. Increasing the minimum wage reduces the value of discrimination by making a surplus of labors for employers to decide. Consider that additionally, the minimum wage reduces the value of discrimination on the non-economic ground in hiring (Basu). With more young people applying for jobs than employers want to hire, and with no legal approach of paying a lower wage, it costs nothing to exclude some candidates from consideration.

Lastly, the minimum wage can affect the quality of an economy’s human capital. Human capital refers to the knowledge, skill sets, and experience that workers have in an economy (Nickolas). Skills generate economic value as a skilled workforce will lead to higher productivity. The concept of human capital is the realization that not everyone has the same skill sets or knowledge (Nickolas). By investing in people’s education, the quality of work can be improved. The relationship that exists between human capital and economic growth is strong. Human capital influences on economic growth and can help improve an economy by expanding its people’s experience and qualifications. Economic growth is an increase in an economy’s ability, compared to past periods, to produce goods and services (Gabe). Economic growth is measured by the change in gross domestic product (GDP) of a country. GDP is a representation of the total output of goods and services for an economy (Nickolas). The government’s role is the key to expanding the skillsets and education levels of a country’s population. At no cost, some governments are motivated to improve the human capital by offering higher education. These governments know that to better develop an economy and boost economic growth is through education. Workers with more qualifications or better skills tend to have higher wages, which in turn increases economic growth through extra consumer spending. Therefore, companies invest in human capital to improve income and productivity. Let’s assume, for example, that an employee working in a technology firm is educated as a computer programmer through on-site training and in-house seminars. The company pays a share of higher education tuition. If, after the training has been completed, the employee continues at the firm, he/she may establish change and new items for the firm. The employee might also leave the company later in his/her career and use the knowledge he/she learned to start a new company. Whether the employee remains at the firm or starts a new company, the initial investment in human capital will ultimately lead to economic growth. The best-recorded performance of creating better employment conditions for economies throughout the world comes from investing in workers. If employment is improving, consumer spending rises, leading to increased revenue for companies and additional business investment (Abel). Employment is, therefore, a major indicator or metric for assessing the output of GDP growth. The Organization for Economic Cooperation and Development (OECD) is a group of more than thirty member countries that help to shape and develop economic and social policies across the globe (Nickolas). The OECD consistently examines the impact on employment and potentially economic growth and education levels. The OECD’s 2018 annual Education at a Glance report reviewed how education systems operate, the level of spending, and who benefited or participated. The OECD also tests how growth is powered by increased education for men and women. In 2018, the OECD found that for countries with people that had the grammar and high school educations experienced an employment rate of 68% for men and 47% for women (Nickolas). However, for those who had college or graduate education levels experienced an employment rate of 89% for men and 81% for women (Nickolas). Although investment in human capital tends to produce more growth, it doesn’t necessarily mean the jobs are available for newly educated workers. Also, geography plays a role when it comes to job openings and the movement of labor (Gabe). Growth could be slowed down due to the cost of moving if job openings are in the northern part of the country, but skilled labor is in the south.

In conclusion, the minimum wage remains a relevant controversy in our society because it impacts the living conditions, jobs, and the economy in both positive and negative ways. Minimum wage stimulates the economic growth of a country by increasing consumption. While it may boost low-income workers’ quality of life, it still relies on the labor market structure. Studies show that a moderate increase does not affect employment, however, a high increase may cause employment. This supports the fact that the minimum wage is still a relevant issue.

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Pros and Cons of the Minimum Wage: An Essay. (2022, August 25). Edubirdie. Retrieved February 1, 2023, from https://edubirdie.com/examples/pros-and-cons-of-the-minimum-wage-an-essay/
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Pros and Cons of the Minimum Wage: An Essay. [online]. Available at: <https://edubirdie.com/examples/pros-and-cons-of-the-minimum-wage-an-essay/> [Accessed 1 Feb. 2023].
Pros and Cons of the Minimum Wage: An Essay [Internet]. Edubirdie. 2022 Aug 25 [cited 2023 Feb 1]. Available from: https://edubirdie.com/examples/pros-and-cons-of-the-minimum-wage-an-essay/
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