Position statement topic: Eliminating Wage Bill
The government should eliminate the minimum wage in order to pave the way for economic development and growth. Every government has a certain level of earnings set for its employees by the legislation. The issue of employment has been debated in the government for centuries and yet no solution has been reached.
Economic arguments against my position
- Implementing the minimum wage bill helps reduce poverty among low-income earners
Minimum wage favors low earners who face exploitation and discrimination in workplaces. Every firm has the responsibility of ensuring that their employees get enough compensation to cater for daily needs. The level of payment set by the government helps low earners achieve higher standards of living. Such people can avoid money to cater for their families, hence contributing to the nation’s economy through taxes charged in shopping areas (Forbes 1).
- With minimum wage, the government can easily manage extra spending in the economy
Minimum wage helps the government manage extra spending in the economy. Setting specific levels of compensation for employees eliminates instances of the government spending extra expenses on salaries. In addition, the issue allows for easier accountability of resources in the government. When the government accounts for all its resources, it promotes economic growth because the saved resources help improve other sectors. In addition, the minimum wage ensures effective resource allocation in all government and private sectors (McEachern 264-265).
- Minimum wage improves the economy through encouraging employment
Implementing minimum wage improves the economy of the country through minimizing unemployment. With the minimum set levels of compensation for workers, many organizations take the advantage and employ more workers but pay them the minimum amount. The government sets the minimum wage in such a way that the lowest amount of salary paid to an employed person can cater for individual’s daily needs. Unemployment affects the economy of the nation because the higher the number of unemployed population the lower the rate of economic growth. Minimum wage has a beneficial effect on the distribution of income on low-income earners and also helps promote employment. In addition, the issue allows organizations raise incomes of low-earners to the minimum level and employ more workers in order to achieve the desired level of production (Brown, Gilroy, & Kohen 523-525).
Economic arguments supporting my position
- Minimum wage creates unemployment to the country.
Minimum wage should be totally eliminated because it has no economic significance to the country. Governments set minimum wages for their employees in order to avoid wastage of resources and over-spending on employee salaries. Minimum wage contributes to the high rate of unemployment experienced in the United States today. Most organizations aim at supplying at above-market prices by promoting more labor and hiring a limited number of qualified employees. Young workers possessing few skills are at a disadvantage because with the introduction of the minimum wage bill, no organization dares employ them. In addition, a lot of employees under the age of 25 face many challenges with the introduction of the minimum wage. Such people engage in criminal activities creating issues of insecurity that have a negative effect on the economic growth of the nation. Moreover, the 2007-2009 minimum wages created the biggest impact on unemployment (Carden). The high unemployment rates experienced in the nation also affects productivity in firms. The experienced workers who receive high compensations record low productivity reducing government revenues on exports.
- Minimum wage increases cost of production in businesses contributing less to the government revenues
Minimum wage should be eliminated because it increases costs of operating businesses especially for small business owners. The Florida government experienced a significant decrease in government revenues generated from businesses because of the introduction of the minimum wage bill. Businesses incur extra costs of catering for increased wages for low-wage employees. The minimum wage bill mandated organizations to increase wages for workers earning between $5 and $6 per day to $8. The issue resulted to more businesses laying off workers resulting to unemployment. In addition, most businesses relocated to other states in an order to avoid increasing wages for low-income earners. Laying off workers and relocating results into inflation where businesses raise prices of their products in order to cater for the high costs of production. Moreover, firms spend more revenues on paying expenses. The issue affects the nation’s economy and contributes to low Gross Domestic Product (GDP) levels because of low revenues (Pollin, Brenner, & Wicks-Lim 6-7).
The argument above shows that minimum wage causes a serious impact to the people especially those conducting small businesses whose earnings go to pay for operating expenses leave little as profit. In addition, organizations suffer from the issue of minimum wage because the government sets the minimum amount they should pay their employees irrespective of the level of production (Richason). The effect of implementing the minimum wage leads to the law of unintended consequences that affects a country’s economy. The argument for the sustaining the minimum wage bill bears no significance effect because most of the benefits discussed are outweighed by negative effects. All countries globally should oppose the minimum wage bill and operate using other policies that encourage the growth of their economies.
Carden, Art. "Scrap the Minimum Wage." Forbes. Forbes Magazine, 26 Aug. 2010. Web. 26
Oct. 2014. <http://www.forbes.com/forbes/2010/0913/curing-unemployment-federal-uncle-sam-scrap-minimum-wage.html>.
Brown, Charles., Gilroy, Curtis., & Kohen, Andrew. “The effect of minimum wage on
employment and unemployment.” Journal of Economic Literature. 20.2. (1982): 487-528.
McEarchern, William. Microeconomics: A contemporary introduction. United States of
America: South-Western Cengage Learning. Print
Pollin, Robert., Brenner, Mark. & Wicks-Lim, Jeannette. “Economic analysis of the Florida
minimum wage proposal.” Center for American Progress. 2004.
Richason, Owen. "The Economic Effects of Minimum Wage." Small Business. N.p., n.d. Web.
26 Oct. 2014.