Question

Read “Is a $15 Minimum Wage Economically Feasible?” by Jeanette Wicks-Lim (RWM, chapter 2.3). How do companies react to an increase in the minimum wage? Should low-wage workers accept lower wages in order to maintain their jobs? Should we accept low wages for some workers or would we all benefit if every business paid higher wages?

Answer 1

First let us understand the meaning of minimum wage. Minimum wage is a fixed amount set by the government that has to be paid by a company to their employees. For an example The minimum wage in a state is $100. There is a retail company and the lowest designation is the Customer Service Associate. It means the company has to pay minimum $100 to their CSAs and if the company want to increase the salary then it is as per their choice But the company has to pay at least $100.

If we talk about the companies’ reaction then the cost of the companies is increased. Generally unskilled labor force comes under minimum wage criteria. So the companies are forced to pay higher amount to the low un-skilled worker. This increase their spending o the companies and the effect can be seen in the profits.

Lower wage workers should accept the lower wages in order to maintain their jobs. Lower wage laws are made to save the lower wage worker from being undervalued. There are companies which can reduce the salary of the employees in the name of cost saving. And being a unskilled worker the workers will have a tough time to search another job.

Lower wages should be accepted in order to maintain the difference between the skilled and unskilled worker. Lower wages for some workers should be accepted.