Summary
Minimum wage is the lowest hourly, daily or monthly wage which is entitled to an employee when working (Freeman, 1996). It may be referred to as the lowermost amount of wages at which employees can sell their labour. The concept of minimum wage has been implemented in various jurisdictions with different rates and differing opinions on the merits and demerits of it. Minimum wage rates vary diversely across jurisdictions in relation to the amount of money, the pay period and scope of coverage. Although laws concerning minimum wage have been introduced, minimum wage might exist without them. The individuals who support it claim that it increases the living standards of employees while reducing poverty. On the other hand, people with the contrary opinion, claim that if it is substantially high to be effective; it will result in an increase in the levels of unemployment, especially for employees who are handicapped or inexperienced (Wellington, 1991). Therefore, it hurts the lesser skilled employees so as to reward the skilled employees. It is also believed that the seclusion of some groups from the labour market would emerge as a consequence.
On the other hand, living wage is a proper wage. It is defined by the wage which can ensure the basic needs are met so as to sustain benign, decent living standards of people (Clary, 2009). Living wage is different from minimum wage in that it set by the law and affords the earner the basic needs which are essential for one to live a quality life; thus leaves individuals to rely on poverty programs for extra income. A living wage enables people to be proud of their work and enjoy a decent life free from poverty. A living wage is a full consideration of the living cost.
References
Clary, B. (2009). Smith and Living Wages: Arguments in Support of a Mandated Living Wage. American Journal of Economics & Sociology, 68(5), 1063-1084.
Freeman, R. (1996). The Minimum Wage as a Redistributive Tool. The Economic
Wellington, A. J. (1991). Effects of the Minimum Wage on the Employment Status of Youths: An Update. Journal of Human Resources, 26(1), 27-46.
