Marketing Paper Discussing About The Effects Of Minimum Wage (Essay Sample)

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Minimum Wage
One of the controversial issues in our society today is the minimum wage. There have been a series of debates in the United States Congress aimed at raising the minimum wage. However, critics and advocates of the issue have always pulled out various convincing arguments which makes them win over the public opinion. One of the primary cases against the imposing of the minimum wage is that it results in injustice, discrimination, and poverty. The paper revisits some of the arguments which oppose the increase in the minimum wage.
Minimum Wage Increases perpetuates injustice, poverty, and Discrimination
Theoretically, the imposition of the minimum wage in an environment where it did not exist will mostly affect the low earning workers. There have been fierce debates tackling the effect of the imposition of the minimum wage on the employment. For instance, consider a situation where a company has employed ten workers, each employee earning $4 per hour. Supposing that there is impositions of a minimum wage of $5 holding the rest of the factors constant then the organization will be forced to lay off two employees from the job. Thus, the enterprise is forced by circumstances to accommodate a maximum of 8 employees as opposed to 10 people that were there initially (Stigler, p.358).
The process will serve to enrich eight workers compromising the positions of 2 experts who have lost their job due to the minimum wage law. The result will be an emergence of hatred and divisions among the low-income earners. Consider two cases that can take place in an organization. Scenario one is that all the ten employees vary in degree of productivity levels and the situation two is that the ten employees exhibit same production rates. If the employees with the lowest percentage of production are laid off, this will serve as a punishment and a form of discrimination against such workers (Stigler, p.360). Although the laying favors the minimum wage, it is unfair and injustice to the laid persons. As a result, dismissing such employees makes them suffer and fuels poverty.
The second case involves laying off two workers of the same productivity. In this scenario, the manager would end up dismissing such people on personal grounds. For instance, the manager may lay off the workers based on their attitude towards the company, dress code, their image and so on. In some cases, the management team could propagate injustice by laying off workers based on factors outside the workers’ control like race and sex. In such a situation, the minimum wage perpetuates various types of discriminations such as institutional racism and sexism. (Stigler, p.365).
Minimum Wage Increases Results in Job Loss
There are various evidence to support job loss since the imposition of the minimum wage. For example, in 193, the first 25% minimum wage led to people losing several jobs. In American Samoa, the increase of the minimum wage resulted in adverse economic effects. As a consequence, President Barack Obama was forced to sign a bill into law which postponed the minimum wage increases. William Wascher and David Neumark conducted a study in 2006 on minimum wages by reviewing more than 100 studies addressing the issue (Neumark et al., p.608). They established out that 66% of the sources point out adverse employee effects as the main impact of minimum wages. Furthermore, in 2010, Richard Birkhauser and Joseph Sabia pointed that the minimum wage increases of the federal states to $9.50 will lead to loss of more than 1.3 million jobs (Brown et al., p.487). Thus, the increase in the minimum wage is disadvantageous in that it leads to loss of jobs and hence it should not be embraced in our current society.
Hurts Low Skilled Workers
Research shows that increases in minimum wage hurt the people it is supposed to help and protect. A study conducted by Wascher and Neumark in 2006 established that increase in minimum wages leads to a reduction of employment opportunities for the low skilled people. Such workers lose their jobs, and this may inflict stress and suffering on such workers (Neumark et al., p.612). In 2012, the state of New York decided to elevate the minimum wage from $5.15 to $ 6.75 per hour, and severe repercussions accompanied this. The minimum wage increases result in a decrease in job vacancies for the lower skilled employees by 20.2-21.8 %. A survey carried out by Michael J. Hicks in 2010 found out that the current increases of minimum wages in some parts of the world are attributed to the loss of approximately 550, 000 part-time jobs for the low skilled people. The research also discovered out that the revolution has led to the loss of 310, 000 positions belonging to the youth (Brown et al., p.500). It has been proved beyond doubt that minimum wage increases lead to severe consequences among the low social class citizens of any country and that is why it has failed in most states.
Leads to Higher Prices for the Consumers
The costs associated with the increases in the minimum wage is always paid by the citizens of that particular country where it has been imposed. The government is forced to raise taxes to meet the needs of the minimum wage increases. The increase in tax is matched by inflations of the price of the common commodities. There are various studies which have been done to support the evidence of an increase in the cost of essential consumer goods. For instance, Wilson conducted a review in 2012 where he examined more than 20 minimum wage studies dated 2004. He was more interested in the effects of minimum wage increases on commodity prices in the United States. Wilson noted that an increase in the minimum wage by 10% has a corresponding 4% increase in the cost of foodstuffs. Besides, the Chicago Federal Reserve Bank carried a similar study in 2007. The bank found out that restaurant food prices are directly proportional to the minimum wage increases (Garth, p.123). The direct proportionality means that an increase in the minimum wage leads to corresponding increases in the costs of eateries in the hotels.
Increase in Minimum Wage Privileges Large Trade Unions at the Expense of the Smaller Ones
The large trade unions tend to lobby the government to consider increasing the minimum wages. By doing so, they seem to act like the saviors of the employees but talk to many workers, and they will inform you that they are still if the trade unions represent their grievances or their interests. The massive trade organizations have the necessary political resources for lobbying the governments forcing the concerned leaders to increase the minimum wages, and this keeps them in business. However, the smaller trade unions find it difficult lobby local employers and are thus flattened and crowded out. Such organizations experience these challenges because there is a high number of unemployed and...