The Effects of Major Corporations Paying Low Wages (Article Sample)

The Effects of Major Corporations Paying Low Wages
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The Effects of Major Corporations Paying Low Wages
When employees provide services to a company, they expect to be compensated through salaries, bonuses, pension savings, or other fringe benefits. Ordinarily, large corporations frequently pay low wages relative to their operations, production policies, and other balance-sheet affecting policies. On the plus side, their tax liability is reduced as a result of their low wages. However, this practice disadvantages the affected employees, condemning them to low quality of life, low living standards, and, in extreme cases, poverty. Although large corporations remit low wages to bump their profit margins, this practice negatively affects employee morale, increases production and staffing costs, and leads to high worker turnover rates.
One of the primary reasons large corporations pay low wages to their employees is to increase their profit margins. According to Arulampalam et al. (2012), paying low wages lowers production costs. These businesses use the free labor market to outsource or subcontract jobs to people willing to work for the minimum wage. In addition, as Hellebrandt et al. (2015) note, low wages boost profits by lowering the amount of tax paid to the government. The lower the wages, the lower the taxes paid, and thus the higher the pre-tax and after-tax profits. Overall, remitting low wages to employees strengthens the balance sheet of large corporations, giving them more money to reinvest in their businesses and expand their operations.
Employee turnover in the job market is increased by low pay. Employees are constantly recycled because they cannot afford to keep a single low-wage job, especially with the cost of living rising steadily since the 2008 recession (Levy & Kochan, 2012). These employees are also unable to afford the cost of living. They are forced to forego essential expenses, such as medical insurance, home insurance, and other necessities (Levy & Kochan, 2012). In extreme cases, some employees are impoverished, adding to the economic burden because the government receives low taxes and must provide social amenities. Not only do the low wages that large corporations pay increase market job turnover, but they also deny these same employees basic needs, such as medical and housing insurance.
When large corporations pay their workers low wages, they unknowingly increase their staffing and production costs. In most cases, lowly paid employees are forced to constantly change their jobs to afford the rising cost of living. Consequently, large corporations must constantly hire, rehire, and onboard new employees to fill the vacant positions left by the resigning workers (Hellebrandt et al., 2015). This constant turnover of jobs lowers the overall employee morale in an economy. Accordingly, many of these companies are unable to meet their production targets (Arulampalam et al., 2012). When production falls, the economy slumps, which adds to the government's burden of providing social services in a deficit economy. Therefore, when large corporations pay lower