This article by Buttonwood focuses on the idea of a higher minimum wage and how that affects productivity. The piece indicates that there has been a global push for the increase of minimum wage and examples are given of both the United Kingdom and the United States of America. In the US for example, presidential candidate Bernie Sanders supports the rise of the minimum wage to 15$ per hour, phased in over seven years (Buttonwood). According to the article, previous research has indicated that a 10% increase in minimum wage causes a 2% drop in employment for the workers that are affected by this increment.
Another effect of having an increase in the minimum wage has been listed as being a high productivity level. For example in Britain when this was implemented, there were lower instances of absenteeism from work (Buttonwood). However, the author indicates that higher minimum wage might not have positive macroeconomic effects as it has no positive revenue implications for the Government. The author opines that helping the poor is a much more complex issue than championing for simplistic slogans.
After reading this article, I am encouraged by the fact the most world leaders have seen the need to improve the conditions of the low-income workers. It would be good for this workers to have their wages increased because the cost of living keeps on increasing by the moment. Such increase will have to be put into place through legislation, and it is encouraging to see that the politicians have this mind set in place.
However, looking from an economical point of view, I agree that such a policy though benefiting the workers directly, it will have a minimum to no positive impact on the government and in turn the economy. I believe that such measures should, therefore, be taken cautiously ensuring that equilibrium is achieved. Achieving economic growth will in turn yield higher wages for workers across the labour spectrum, and I think that this would be better than handing out wage increments directly to the workers.
Works Cited
Buttonwood. "Employment Down, Productivity Up?" The Economist. The Economist Newspaper, 2016. Web. 07 Apr. 2016. http://www.economist.com/blogs/buttonwood/2016/04/minimum-wages
