Performance-Based Pay: Should the Minimum Wage be Abolished? (Essay Sample)

Performance-Based Pay: Should the Minimum Wage be Abolished?
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Performance-Based Pay: Should the Minimum Wage be Abolished?
A minimum wage is a form of compensation that ensures workers have a bottom line pay to offer their services. The minimum wage policy works to eradicate poverty among low-income workers (Steinhart et al.,2017). Over time, the minimum wage has continually increased due to lobbying and workers’ union demands. However, the minimum wage’s continued increase has caused significant adverse effects for both employers and workers. Minimum wage causes unemployment, inflation and unfair competitiveness among companies. Therefore, this discussion seeks to assess the abolishing the minimum wage due to increased inflation, unemployment, and unfair competitiveness.
Minimum wage contributes to unemployment. Although minimum wage is crucial to eradicating poverty among low-income workers, it causes unemployment due to high production and employers’ training costs. Brozova (2018) postulates that companies need to remain efficient through neoclassical economics by finding an equilibrium to external factors such as minimum wage. Reduced number of employees and their benefits ensure the equilibrium to remain efficient. Additionally, the increased wages make it difficult for workers to find new job opportunities due to skill competition and the high wage expectation. Thus, unemployment increases since companies only hire a few skilled workers.