All Economic Is Local Essay Sample

The wage bill is the amount of payment that an employer compensates an employee for performing a service. A minimum wage bill, on the other hand is the minimum payment that an employee receives for the service. Minimum wages are establishment by legislation by the central government. It, therefore, becomes illegal and an offence to compensate employees less than the minimum wage bill, as stipulated by the government legislation.
The main mandate of the minimum wage bill legislation by the government is to protect its citizens from exploitation by employers. This enables employees to be in a the position of affording necessities of survival, such as food, shelter and clothing. The minimum wage bill oscillates between countries, counties and sometimes-even provinces.
Minimum wage bill has raised strong disparagement from scholars, employers and economists since it creates a payment floor for the earnings. Payment floors, on the other hand, could influence negatively on the economy of the country. They argued that the price floors could lead to a deadweight loss in the economy; this might force corporations to hire few employees, thus creating unemployment.
An example is The United States of America whereby if the minimum wage within a State is higher than the minimum wage of the U.S. Federal system, then workers have to be compensated to cater for the difference in the minimum wage. The year 2009 was the last time the minimum wage bill was federally increased in the United States of America. The minimum wage bill is not affected by rise or fall of inflation, neither by an increase in the cost of living.
Although many critics have disapproved the concept of a minimum wage bill, it still holds that the minimum wage bill is the best vice to reduce poverty levels within the society. In one aspect, the minimum wage bill Enables the poor families to meet their needs, while narrowing the gap between the rich and the poor. The last point is emphasized by the overpriced income earned by Managing Directors and the big ‘cats’ of the companies, who are the same people advocating against the increase of the minimum wage bill.
The concept of an increase of the minimum wage bill has a tough populist plea, especially in countries where the discussions on the social class, if held, are in most cases inclined in terms of the poor versus the rich. The poor in many cases are in the losing truck, as the rich have dominated and use their riches, capabilities and influence to oppress the poor.
Moreover, as a coin has two sides, there are highlighted demerits of increasing the minimum wage bill. Economists argue that increasing the minimum wage bill demoralizes small businesses, squeeze profits margins of companies, causes inflations, and makes employers reduce the number of employees and finally a raise in the price of the final goods to the consumers.
The quality and quality of a commodity a company produces, the company’s main wish is to manufacture it as economically as possible. The company’s main task is to establish the cheapest amalgamation of factors of production, putting the product quality and the price of the productive factors into consideration. The duty is best understood through the concept of the production function.
In the United States, the overlapping and awkward design of the welfare programs thwarts those in need from gaining from the legislation of the minimum wage bill. As the wage bill is raised, the citizens of the U.S end up losing federal tax credits and support. The wage bill thus becomes irrelevant and of no use. For instance, a single mother of one child faces a marginal tax rate of 91 percent when her salary rises from $7.25 to $1.10 an hour. Studies also have revealed that higher minimum wages do not necessarily reduce poverty. Despite the intended purpose, the minimum wage has proved ineffective and in most cases counterproductive.
The minimum wage tends to affects negatively low skilled workers. Ballooning wage bills have a tendency to encourage employers to fire low skilled workforce with a skilled personnel. Given the option of hiring skilled and unskilled workers for the same rate of $10.10 an hour, the employers will always prefer the skilled, leaving the less skilled workers unemployed.
Raising the wage bill has a drastic effect on the economy of the country. If every employee advocates for an increase of salary, the economy of the country will end up crippled. For instance, if a country X revenue of 2 trillion annually, and uses 1.5 trillion on the expenditure, paying the civil servant, the country will have remained 25% of its revenue to spend on development. For a country to thrive, a big chunk of the budget should allocate to developments, such as industries and hospitals that will improve the economy of the country.
Although a minimum wage bill may appear appealing from the short-run, it is indeed not healthy and affects the country's economy as well as that of its citizens. Therefore, the leaders should think of other important legislation measures as well as policies that will improve the lives of the citizens.