Minimum wages refer to the common government policy which requires the absolute lowest possibly salary that can be paid per hour in public or private industries from selected jobs. The modern practice of governments setting a minimum wage began in the late 1800s in New Zealand. By the 1920s, most western nations and a fair number of nations around the world had instituted basic minimum wages legislation. Nowadays, nearly all nations have some form of a minimum wage policy in force (Yadoo & Woellert, 2016). However, the ubiquity of minimum wage laws across the has not meant that it is universally accepted as a positive government action. To be sure there are many arguments questioning its practicality or the benefits that it produces. Conversely, its long history, persistence as a policy choice, and diversity suggests that its usefulness outweighs its elimination. The following are some of the more common and persuasive arguments for its continued use.
First, from a public policy perspective, having a minimum wage decreases or eliminates the exploitation of workers, especially salaried workers. Naturally, two fundamental goals of any business, is to increase revenues and, make a profit at some point in time. Failure to do either, usually results with the closing of a business. Consequently, businesses are constantly looking for ways to cut cost. One necessary cost, however, is labor. Accordingly, it is more likely that without a minimum wage, companies would seek to pay the least amount of salary to a worker as possible. Since there is always someone that is willing to work for less, a company would have no incentive to pay anything above what the work with the lowest salary demand wants. This would be especially true if the work to be done is non- or unskilled labor, suitable for most. On the other hand, the imposition of a minimum wage, would eliminate one means that a company can exploit a work. As a result of minimum wage setting a floor amount that a company must pay for labor, it would no longer be able to undercut its current labor force, at least the labor force working for the minimum, by bringing in labor that would be willing to work for less. In essence, with a minimum wage, companies would need to find different aspects of their expenses, other than manipulating its labor force to in which to reduce costs.
A second public policy reason for having a minimum wage is that helps to alleviate poverty. Without a minimum wage, as mention above, it is more likely that a number of people would be willing, for whatever reason, for less than the current workers. On the one hand, while they would a job and the ability to earn a living, it would be no guarantee that the salary they have would be enough to survive on. Moreover, it is even less likely that their employer would guarantee that their current wage would remain the same, especially if there are still others willing to work for less. On the other hand, workers that are not able to work for continuously diminishing wages would be out of work and unable to make a legitimate living. As a result, poverty levels would increase both through the increase in unemployment as well as the increase of the working poor, or people that have a job but still are not earning enough to lift them out of poverty. If there was a minimum wage; which would hopefully be set at an amount that is above the poverty line; the number of workers who would be able earn a reasonable living would increase thereby decreasing the amount of people that would be living in poverty (Konczal, 2014). Naturally, the higher that the minimum wage is the bigger boost to the incomes of the formerly power would occur, further decreasing the amount of people in poverty or even raising the people that are in abject poverty to a level that that is one-step closer to leaving poverty.
Third, from a macro-economic perspective, instituting a minimum wage or increasing the amount of a minimum wage is a natural, economic stimulus (Aaronson, Agarwal & French, 2012). The element underlying this argument is that the more money people have in their hands or bank accounts, the more likely they will be tool spend it. The more they spend, the more the economy prospers creating the need for more jobs and higher pay, which in turn provides allows consumers to earn more money which they will spend. This argument is rather intuitive in that without a minimum wage, workers will have less cash to spend, and whatever cash that they are able to earn will most like be spent on necessities such as food and shelter rather than on computers, travel and cars.
Finally, from a social justice perspective, having a minimum wage if simply fair. Under this argument, why should a company owner or its leadership be allowed to make enormous sums of money based on the hard work and abilities of employees that are not paid a salary that allows them to simply will without poverty. To be sure, a minimum wage would provide a just society the means to require company owners to reasonably compensate the workers on whose labor their wealth is based. This is a reasonable bargain that makes sense in that it treats works equitably, fairly, and justly.
References
Aaronson, D. & Agarwal, S & French, E. (2012, Feb. 08). The spending and debt response to minimum wage hikes. Retrieved from http://www.ires.nus.edu.sg/workingpapers/IRES2012-008.pdf
Konczal, M. (2014, Jan. 4). Economists agree: Raising the minimum wage reduces poverty. Retrieved from https://www.washingtonpost.com/news/wonk/wp/2014/01/04/economists-agree-raising-the-minimum-wage-reduces-poverty/
Yadoo, J. & Woellert, L. (2016, Jan. 18). Minimum wages. Retrieved from http://www.bloombergview.com/quicktake/minimum-wages
