Introduction
There is no state decided minimum wage in the state of Tennessee; therefore, they follow the federal minimum wage. Therefore, there is no promised wage law in the state that requires states to pay their wages promptly. Like many other states throughout the United States of America, FLSA (Fair Labor Standards Act) applies to Tennessee workers set according to the Federal Minimum Wage and Labor Law. According to federal minimum wage in 2015, businesses throughout the state of Tennessee need to pay $7.25 per hour. The majority of workers in Tennessee gets $7.25 per hour for their daily labor and overtime (NCSL, 2016).
Federal vs State
The discussion over choosing federal versus state minimum has been a point of discussion for several years. From the economic point of view, having the same minimum wage in all states makes sense, but when other factors are brought into the equation same minimum wage makes less sense. There are major differences in living expenses in the New York or California and Tennessee (White, 2015). In case every state has the same minimum wage for instance $12 per hour, the left over income of minimum wage workers in states such as Tennessee will be much greater than the minimum wage workers living in New York. Therefore, every state should have the right to decide their minimum wage.
Also, having a similar minimum wage for the American citizens which are 320 million strong is against the concept of basic economics. The demand and supply for labour varies from region to region and labour skills are varied from region to region (Worstall, 2015). Therefore, labour working in different types of work and handling different level of difficulties should not get the same amount. There has to be a difference in wage for a waiter working in a Manhattan restaurant that remains busy all day and requires the waiter to work overtime to complete his assigned tasks; and a waiter in a Prince's Hot Chicken in Nashville that remains empty and most people order in (Ford, Travis & Owens, 2012, p. 57).
Having a federal wage throughout the country which is higher than the state can end up costing the state in the long term (White, 2015). Many businesses that are unable to pay the higher minimum wage would struggle to cope and would need to close shop. There are many businesses that are struggling to pay their employees the current minimum wage and it is possible that increasing the minimum wage might lead to a reduction in workforce and poor customer service (Wolfson & Belman, 2004, p. 296). With several businesses incapable of generating income for the state, it is possible that state tax collection will reduce. Therefore, having a federal wage is not in the best interest of the country and states should be allowed to decide their minimum wage.
Outsourcing to a Developing Nation
Outsourcing has been used as a means for increasing profits and reducing costs for many American corporations. The main reason for a business to outsource their jobs is reducing the labour costs. Many major American corporations have outsourced their jobs to countries with cheaper labour force, as it is useful in increasing their profits. Outsourcing helps corporations to complete their tasks and pay much lower for the same job. Cost of living and basic expenses in other countries are significantly lower that America, and American companies can outsource their jobs while paying their employees respectable pay. Also, employees are keen on working in American corporations as even though they are paying lower than the minimum wage in the United States of America, they are still paying above the local wage rates. Therefore, as long as American corporations are paying competitively in the foreign market where they are outsourcing the jobs, it is fair for them to pay lower than the federal minimum wage.
American corporations should have the right to pay lower wages while outsourcing, but it should not be too low that violates the human rights issues. There have been cases of American Corporations such as Nike hiring employees in developing countries where they paid wages below than the poverty line. Such violations of human rights can be part of outsourcing and it should be made unconstitutional and criminal activity. Therefore, American corporations should not be allowed to pay wages that are below the poverty line in the name of outsourcing their jobs. But, organizations that are taking care of the wage regulations in different countries are making sure their employees are treated in a fair manner. Therefore, asking an American corporation to pay the federal minimum wage, while outsourcing their jobs would not be fair on the corporations and corporate goals.
Conclusion
There is no state determined minimum wage in Tennessee; therefore, the state follows the federal minimum wage of $7.25 per hour. The federal minimum wage should not be made nationwide as living expenses, skill set of workers, demand and supply of work, spending power of buyers varies in every state. Having one minimum wage throughout the country would mean that several businesses would need to close their shops or reduce their workforce to sustain their business (Gorry, 2012, p. 57). When outsourcing their jobs American corporations should be allowed to pay lower than the federal minimum wage as living expenses are much lower in developing countries. The only case where federal minimum wage should be implemented when an American corporation is breaking human rights laws by paying lower than the poverty line.
References
Creamer., R. (2014, 22 July). United Airlines’ Outsourcing Jobs to Company That Pays Near-Poverty Wages Is Shameful. Retrieved 10 May 2016 from, http://www.huffingtonpost.com/entry/united-airlines-outsourci_b_5609016.html?section=india
Ford, W. F., Minor, T., & Owens, M. F. (2012). State Minimum Wage Differences: Economic Factors or Political Inclinations? Bus Econ, 47(1), 57-67. doi:10.1057/be.2011.37
Gorry, A. (2013). Minimum wages and youth unemployment. European Economic Review, 64, 57-75. doi:10.1016/j.euroecorev.2013.08.004
NCSL. (2016, 14 April). State Minimum Wages | 2016 Minimum Wage by State. Retrieved 12 May 2016 from, http://www.ncsl.org/research/labor-and-employment/state-minimum-wage-chart.aspx
White., G.B. (2015. 15 January). Should Cities Have a Different Minimum Wage Than Their State?. Retrieved 12 May 2016 from, http://www.theatlantic.com/business/archive/2015/01/should-cities-have-a-different-minimum-wage-than-their-state/384516/
Wolfson, P. J., & Belman, D. (n.d.). The Minimum Wage: Consequences for Prices and Quantities in Low-wage Labor Markets. SSRN Electronic Journal. doi:10.2139/ssrn.406640
Worstall., T. (2015, 7 August). Instead of $15, Or $7.25, There Should Be No Federal Minimum Wage At All. Retrieved 12 May 2016 from, http://www.forbes.com/sites/timworstall/2015/08/07/instead-of-15-or-7-25-there-should-be-no-federal-minimum-wage-at-all/#1b51d0fe1854
