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2 pages/≈550 words
4 Sources
Business & Marketing
Reaction Paper
English (U.S.)
MS Word
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Performance-Based Pay: The Minimum Wage Should be Abolished (Reaction Paper Sample)


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1. Should the Minimum Wage be Abolished and replaced with performance base pay?
Format the text according to the following formatting style: Harvard


Performance-Based Pay: The Minimum Wage Should be Abolished
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The minimum wage is a federal or state government set labor price floor, showing the lowest wages employers can pay their employees. It was first introduced in the US in 1938 to caution employees from the post-depression economy, stabilize their standard of living, and protect their overall health and wellbeing. Since then, it has fluctuated through the years: highest in 1968 at $1.60 per hour ($11.91 after inflation adjustment) and lowest in 1938 at $0.25 per hour ($4.6 per hour after adjustment). The proponents and opponents of the minimum wage advance various arguments for or against it. For instance, proponents claim that it protects employees from exploitation by their employers and ensures they can afford necessities. However, opponents claim that the minimum wage is counterproductive since it increases unemployment, reduces productivity, and encourages employee lethargy. Therefore, the minimum wage should be replaced with performance-based pay to increase productivity, reduce labor costs, and reduce turnover.
Performance-based should replace the minimum wage system to reduce labor costs and, in return, curb unemployment. An industry-standard minimum wage requires employers to pay all their employees a flat rate, regardless of their qualifications, effort, and talents. However, Dierynck and van Pelt (2021) argue that performance-based pay allows companies to pay their high-performing workers equivalent to their service. Moreover, in this system, employees understand their employers’ expectations for demotions, termination, raises, commissions, and promotions (Dierynck and van Pelt 2021). Employees in such a system are not only more in control of their earnings, but they are also in control of their employment contracts and tenure. Therefore, performance-based pay reduces unemployment by clearly outlining performance expectations to continue in a job.
Performance-based pay should replace the minimum wage to increase labor productivity. Since minimum wage entitles employees to a paycheck, it diminishes their drive to work harder. Moreover, it rewards indifference equally to hard work, which “constrains business growth” and causes businesses to “go under or restructure” to keep up with increasing labor costs (Stein 2018). However, performance-based pay motivates employees to work harder to earn more (Lynn 2019). Companies benefit from a focused, determined, and hardworking workforce, the ripple effects of which echo throughout the entire economy. Therefore, performance-based pay motivates employees, increasing productivity and economic growth.
However, a minimum wage protects lowly-skilled and lowly-trained laborers from exploitation, ensuring a stable living standard and wellbeing. It incentivizes these workers to actively look for jobs since they already know how much they will earn from their services (Giuliano 2013). Therefore, a minimum wage allows lowly-skilled workers to gain vital experience and skills, which improves their professionalism. Ultimately, their wages also increase commensurate to their experience, further increasing their economic contribution through remittances, such as tax, health insurance, mortgages, and other payments.
All arguments considered, the minimum wage should be abolished and replaced by performance-based pay. Performance-base

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