Question

Since 2009, the national minimum wage has been $7.25 per hour for most occupations in the private sector. Many of those who support an increase in the minimum wage believe this is one way the government could possibly reduce poverty, while its opponents believe that it creates unemployment and hurts low-skilled workers. The following items address the idea of raising the minimum wage from the current federal minimum of $7.25 per hour.

5) Do advocates of a minimum wage law believe that workers should be paid based on their output (i.e., performance) or on their level of need? What do opponents of the minimum wage law believe workers’ wages should be based on? Which one is sustainable and why?

6) Advocates of a minimum wage often believe that employers would “exploit” or “take advantage” of their workers if there were no minimum wage. How would you know if employers are “taking advantage” of their workers if there were no minimum wage? What could the employee do if they believed they were being exploited?

Answer 1

5) Do advocates of a minimum wage law believe that workers should be paid based on their output (i.e., performance) or on their level of need? What do opponents of the minimum wage law believe workers’ wages should be based on? Which one is sustainable and why?

The advocates of the minimum wage believe that workers should be paid on the basis of their basic needs and the minimum wage should be based on the following 3 parameters:

1. It should cover the basic needs of the workers and their families

2. It should give protection to all the workers against unduly low wages

3. It should help in reduction of inequalities of income.

The opponent of the minimum wage law believes that it should be based on the contribution of the workers in the total production. The wages should be based on the marginal contribution of the workers and this would lead to economies and efficiency in production as well as the distribution of wage incomes.

The advocates as well as the opponents of the minimum wage work on two extreme and opposite principles. The ideal and sustainable way to decide the justifiable wage would be the intelligent amalgamation of two schools of thought.

6) Advocates of a minimum wage often believe that employers would “exploit” or “take advantage” of their workers if there were no minimum wage. How would you know if employers are “taking advantage” of their workers if there were no minimum wage? What could the employee do if they believed they were being exploited?

In case the employee is getting the wages lesser than their marginal production, they are exploited. As per the economic principle, the justifiable wage is equal to the marginal contribution to the total production by each worker. In case, the employee is not receiving this minimum level, it is clear that they are being exploited. The wages received should be equal to their average product.

The employee can take the following steps to defend themselves against exploitation:

1. The first and foremost step is knowing your employee rights.

2. The employee can deny inadequate compensation.

3. The employee should know their value and should negotiate for the right compensation.

4. Last, if nothing works they can report the matter in labor courts.