Essay on Effect of Minimum Wage in the Society

Wage refers to regular payments or reward in the form of cash which is made either daily or every week by the employer for compensation or remuneration for the work done by the employee. In Economics wage is defined as the price which is paid for the labor contribution in the process of the production of goods and services. According to Aghion, P: Algan, Y: & Cahuc, P. (2008), defines wage as the overall amount of compensation which is paid by an employer to the worker for work completed or service rendered. There are two concepts in the defining wages; wage It refers to translating fee money regarding services that can be bought by money or concerning commodities. It relates to the worker's advantage for the work which the worker can command in return for his or her services e.g. comforts and necessities. Nominal wage refers to the sum amount of money which a laborer for he or she can receive in participation in production.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

Types of wages

Piece wage: There are different kinds of wages in our society they include the following. Piece wage is kind of payments which are its payment mainly depends on the input of a worker contribution in production. In the calculating, the amount owed to the worker units is taking into consideration the units coded in the manufacturing process. Wage in kind: This is most common types of payments, its mostly practiced in rural areas where the laborer after providing his or her services to an individual family which paid regarding commodities rather than cash.

Time wage: This is when some hours worked by the worker is the principal determinant either the laborer will get a higher amount or less. For example, if an employee is paid US$ 14 per hour, this is referred as time wage (Merino, 2014). Contract wage; Contract wages are usually fixed salaries in the beginning for the completion of the assignment. Examples of contract wage is when a contractor is paid US$3m after completion of construction a road. Cash wage; this represents the type of wage that the worker is compensated in the form of monetary form .for example is the salaries payment in cash to employees for work done.

The effect of a minimum wage in the society.

The federal governments suggest a minimum wage rate proposal, but every state set the minimum wage for the workers working within its state. This proposal has had its fair share effects across various states in the United States of America. They include, there has been increased job hunt spirit in the society since the low skill workers in every community he or she is aware of the minimum wage rate. Further, the worker is at liberty to search and compare wage rate in another state if higher on the other side; they will be motivated to find higher wage paying states (Aghion, P; Algan, Y; & Cahuc, P. 2008).

Unskilled employees, if without set minimum wage rate most families in the society especially the single parents would find it difficult to in providing the necessity for their families. The minimum wage has contributed to income generation for the persons to earn and afford basic needs for their families even though they lack required market skills and professionalism.

Minimal wage rate can lead to less low morale by some workers working for higher wage rates; they may feel the action being against them since an increase in the minimum wage without their wage increased. It would reduce their working spirit and morale in working in that company. The minimum wage can also lead to no or few job creation to society members. An employer would prefer to introduce a bonus for extra hours worked to existing employees rather than incur costs in hiring new employees and train him or her about the work. It further leads reduced chances of a minimum job seeker to get work at a poor performing company (Merino, 2014).

The increase in minimum wage rate could mean a big boost for a worker with a lower wage earning. It means that thousands of people in the society could see the rise in the salary if the minimal wage is increased. Further, it means that they could be able to improve their standard of leaving and more enjoy a better lifestyle.

According Neumark, D. (2001), asserts that setting of minimum wage rate on employees of a food industry at US$ 15 per. This will translate to owners of the fast food hotel factor in the cost of paying at minimum wage in the prices of foods. Increase the minimum wage could cripple their business negatively since the affordability of their fast food could be only be bought by fewer customers who could be able to pay higher price. Further minimum wage means to rules on wage rate and limiting room for wage bargaining thus many organizations could be forced to restructure their business thus translating to the massive loss of jobs.

In summary effects of a minimum wage in society have more adverse effects like retrenchment, closing or downsizing business entities, kills employees working morale, high costs of goods and cripples the economy. The positives are improved living standards and employment rate increases slightly

References

Aghion, P., Algan, Y., & Cahuc, P. (2008). Can policy interact with culture: Minimum wage and the quality of labor relations? Cambridge, MA: National Bureau of Economic Research.

Merino, N. (2014). The wage gap.

Neumark, D. (January 01, 2001). The employment effects of minimum wages: Evidence from a prespecified research design. Industrial Relations: a Journal of Economy and Society, 40, 1.)