Question 2 from chapter 17: "Is it morally objectionable for corporations to pay the market wage...

Question 2 from chapter 17: "Is it morally objectionable for corporations to pay the market wage for employees if the market wage does not provide a 'decent' standard of living? Explain."

Rycroft, Robert S. 2018. Economics of Inequality, Discrimination, Poverty, and Mobility, 2^nd Ed. NY: Routledge.

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Expert Solution

Employers generally are not interested to pay an employee more than the market wage or what the employee is worth to the company, even if that is not sufficient to meet employee's expenses. Market wage rate represents what similar employers would pay the worker for similar jobs, given the skills, abilities and the experiences the worker possesses. Most employers prefer to pay market wage rate because they think if they pay below it, their workers may leave for higher wage.

No, it is not morally objectionable for corporations to pay the market wage for employees if the market wage does not provide a decent standard of living because market wage rate is the minimum wage rate which are provided by all employers. At the same time, It is true that minimum wage rate is not sufficient to cover all expenses of the worker. They have to cut their expenses to adjust with the market wage rate. A minimum wage rate is adjustable but below minimum is not accepted by the employee and it is ethically objectionable for the corporation to pay the workers below the minimum wage.

However, it is always good to pay workers a living wage which is enough to meet their basic needs and left some extra money with them to save. Living wage is more important than minimum wage because without a living wage a worker may be forced to
a. work overtime or take multiple jobs.
b. engage their children in work instead of sending school.
c. be denied their basic rights to food,shelter, health, housing and education and unable to take part in cultural events and other ceremonies
d. be unable to fight against serious diseases such as cancer, kidney failure and heart-attack.

Living wage makes workers more productive and they are less likely to leave the company. A living wage provides workers a decent standard of living.

Rahul Sunny answered 1 year ago

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