Minimum wage refers to the least remuneration on a daily, hourly, or monthly basis legally paid to employees by their employers. Similarly, it is the least wage at which workers are willing to sell their labor. Minimum wages are established by the government legislation or by a contract. This implies that paying an employee below the minimum wage is illegal. Minimum wage may, however, exist without a law. Extra-legal and custom pressures from labor unions and governments may set a minimum wage, though not legally binding (Wilson, 2012). This is done through collective bargaining. Collective bargaining is the negotiations between employees and their employers seeking to establish agreements that govern working conditions. A minimum wage plays a crucial role in today business operations as it affects the ability of businesses to hire employees. The minimum wage rate legislation was first enacted in Victoria, Australia in 1894. Prior to this, there were efforts to control wages as trade unions were being decriminalized via a collective agreement during the 19th century. The minimum wage movement aimed at halting sweatshop labor to avoid or reduce industrial friction (Beman & Wolfson, 2010). Sweat shop labor involves working for a more extended number of hours in deplorable conditions for a very low pay. The minimum wage seeks to guard employees against exploitation by organizations they work for and enable them to afford the necessities of life. The supporters of minimum wages argue that it boosts living standards of the workers, reduces poverty, eliminates inequality, enhances efficiency in businesses, and boosts morale of the employees (Flinn, 2010). The minimum wage varies in different countries, provinces or states due to the unique compensation structures present in the industries. Economists have over the years strongly criticized a minimum wage rate since it constitutes a price floor for wages. The establishment of these price floors may lead to the occurrence of dead weight loss in the economy and increased possibilities of the economic inefficiencies. Companies would in such a situation prefer to hire fewer workers, resulting in unemployment especially with regard to workers with low productivity (International Labor Organization, 2010). Minimum Wage Models
Economists have developed various models to help them understand the implications of setting a minimum wage on other micro-economic variables. The current studies related to this wage focus on estimating the extent to which a higher minimum wage increases the rate of unemployment (Wilson, 2012). The main interest of researchers is the examination of implication of minimum wage legislation on the length of an employee’s shifts, worker training, human resource practices, firm profits, and operational efficient and internal wage structures. Three models are used in the analysis of implications of the minimum wage legislation, namely institutional, competitive and monopsony models. Institutional Model
The institutional model of labor markets borrows its concepts from behavioral economics. The model emphasizes that there is an imperfect competition in labor markets, that these markets are socially embedded, institutionally segmented and susceptible to over-supply (Wilson, 2012). Psycho-social aspects and factors related to technology determine operation costs and productivity in the labor market.
Economists favor this model of a minimum wage since the adjustment of minimum wage upward may not have any employment effect in the short run (International Labor Organization, 2010). The expected response of the employers is to seek for ways of absorbing increased wages instead of laying off workers. The possible ways of absorbing costs include expansion of sales, improvement in service provision and general economic expansion (Wilson, 2012). The proponents of the institutional model believe that improving...
A minimumwage is the minimum amount of compensation an employee must receive for performing labour. In economic term, minimumwages is the price floor of the pay of the labour that set by the government. The minimumwages rate normally was fixed by legal authority as such, it is illegal to pay an employee less than the minimumwage. Our economic transformation goal is to make Malaysia a high-income nation by 2020, with a per capita income of US$15,000 a year, however there are still around 30% of the people in Malaysia are still living below the poverty line. The general purpose for the implementation of the minimumwages is to ensure that the wages of a labour is able to meet the basic standard of live which is be at or above the poverty line so that they can survive with their salary. In Malaysia, The Prime Minister YAB Datuk Seri Najib Abdul Razak announced the rates of national minimumwages in Peninsular will be RM 900 while Sabah, Sarawak and Labuan will be RM800. This implementation of minimumwages in Malaysia was the decision under the National MinimumWages Consultative Act 2011. The national minimumwage is the first ever in Malaysia. This...
...The minimumwage is the lowest rate at which a worker can be played. There she minimumwage laws pegged to hourly, daily and even monthly rates, although U.S. law is pegged to an hourly wage. Also, a minimumwage law usually makes it illegal for a person to sell his labor for less than the minimumwage rate
The general purpose of the minimumwage is to guarantee a living wage to all workers who work a standard period of time, whatever that might be. In theory, any labor who works 40 houses a week on minimumwage should be at or above the poverty level line. However, the minimumwage has not kept up pace with the inflation in the United States and the cost of living increases more than the wage increases that are given and that way behind the standards
Minimumwage laws were first started in Australia and New Zealand in the 1890s.The first minimumwage to be law was in Massachusetts in the 1912 but it only applied to children and women. The federal minimumwage was established in 1938 by the Fair Labor Standards Act. Initially set at 25 cents an hour, the wage has been raised periodically to reflect changes in inflation and productivity....
...Union address, President Obama aggressively addressed the age-old debate of raising the minimumwage. The President has urged legislators to raise the federal minimumwage to $10.10 per hour to fight the ongoing battle of class inequality. Subsequently, Massachusetts legislators proposed a bill that would incrementally raise the state minimumwage to $10.50 over the next two years just weeks after the President’s address. The prospects of this proposed legislation have left workers and liberals alike in Massachusetts rejoicing while employers and conservatives (all five of them) have balked at the bill. The following paper looks to examine this proposed bill and accompanying arguments for and against raising the minimumwage.
The Massachusetts MinimumWage
On March 13 of this year, House Speaker Robert DeLeo proposed a bill to incrementally raise the current state minimumwage in Massachusetts from $8 to $10.50 by the middle of 2016. Unlike the proposed federal legislation, however, the new minimumwage in Massachusetts would not be tied to future increases in inflation. The bill entails an increase in wages to $9 in July of 2014, followed by an increase to $10 in 2015, and ultimately, an increase to $10.50 by mid-2016. This proposal, however, is not a new...
November 5, 2013
Argument Rough Draft
Do minimumwage workers deserve a better paying wage? Perhaps a wage that they are believed to be able to live off of? Will raising the minimumwage help those it really intends to? With unemployment pushing 8% nationwide and costs rising, nationwide people are pushing for minimumwage to be increased. Theminimumwage was established by Franklin Roosevelt as part of the New Deal in the 1930’s. The Fair Labor Standards Act of 1938, as stated by Jonathan Grossman on dol.gov, is what ultimately established the minimumwage nationwide for all workers. The minimumwage guarantees workers a wage that is fair for all workers. It is the lowest possible amount that an employer can pay their workers.Though it is believed that the minimumwage will help the lower class, raising it will not actually help those it intends to, but in fact raise living costs and many other expenses when the minimumwage is raised.
The problem with minimumwage is that it is not kept up with yearly. As inflation across our country increases yearly, minimumwage stays the same. With unemployment at about 8%, many people are...
...Minimumwage in Nepalese Labor Market
Minimumwage is the price floor imposed by the government for the welfare of labor. Price floor is the legal minimum on the price at which a good can be sold. It is an attempt by the government to maintain prices at other than equilibrium levels. When a government imposes a price floor, there will be two cases. One the price floor is not binding if the price floor is maintained below equilibrium price level. In this case, the market forces naturally move the economy to the equilibrium level and the price floor has no effect. In other case when price floor is above equilibrium level, such price floor is binding. In this case the market price equals price floor as government imposes such control on prices for the welfare of labors. At this point the quantity supplied exceeds the quantity demanded which results in surplus of labor i.e. unemployment. Since the supply is high some seller are unable to sell all they want at the market price. The sellers who appeals to personal biases of the buyer, perhaps due to racial or family ties, are better able to sell their goods than those who do not. By contrast, in a free market, the price serves as the rationing mechanism, and sellers can sell all they want at the equilibrium price. The impact of minimumwage rate depends on the skill and experience of workers. Highly experienced and...
...Minimumwage is defined as the lowest possible income that an employer can legally pay an employee. This ensures that all people are fairly paid and not defrauded by companies or businesses. Minimumwage is now a staple in 90 percent of countries in the world (Minimum). Even with these minimums, a person’s lifestyle is hard to maintain. Sustainability, in my opinion, is the ability to keep or maintain a certain amount of physical or mental property. In this light of sustainability, minimumwage is not a sustainable amount of money in which to survive with a basic quality of life. There are many supporters and objectors to the minimumwage debate. Supporters say that increasing minimumwage increases the workers earning power and wages. Objectors say that increasing minimumwage only leads to unemployment due to small companies’ inability to pay workers. Also the increased inflation rate of goods only hurts the economy, which leads to many jobs being lost, mainly the jobs held by minimumwage patrons. Although this is a heated debate there is one thing to which both sides agree; something needs to be implemented so that workers are not exploited by businesses. Economists are exploring the viability of minimum...
MinimumWage - The Dubious Policy
MinimumWage The Questionable Policy
As early as 4:00 am in the dark and cold morning of winter, a few people walking on an wet sidewalk. Under chilling wind, those people walk to a large, old building. Inside the building, the people work for repetitive, backbreaking low waged jobs. In the same day, late at night, you can see similar scene: some people walking out of the building under heavy humidity.
I'm not one of those people, I don't know the feeling of a minimum waged worker. Like all of those workers, I feel exhausted after finishing my job. Everyday, I wait with impatience to hear my supervisor say “That's it, go home.” After I drop my load and park my truck and wipe my sweat, I can only think to return to My home and sleep. I lost most of my time and energy just for a few dollars.
There are a lot of people that work harder and earn less than me. The poor, especially less-skilled workers, have access only to “bad jobs at bad wages”. Those workers always face bad situations. They are poor. They are struggling to sustain the life of their resoective families.
On the contrary, the owners of the companies where we work have a high standard of living. Low wages are advantageous for the group of people known as traditional elites who own labor-intensive firms because it lowers production cost, thus increase the...
Should We Raise the MinimumWage to the Average Pay Rate?
University of Phoenix
September 30, 2013
“Should We Raise MinimumWage to the Federal Average Pay Rate?”
On the United States Department of Labor website it states that in 1938 it was decided that a federal minimumwage should be set. When it was set, it was set for the amount of $0.25 an hour. Now as of 2013 it is $7.25 an hour. (Grossman 1978. Washington’s minimumwage is the highest at $9.19 an hour, it joins its 18 other states with a higher wage. Almost half the states agree with the minimumwage; five have wage lower and another five do not even have a minimumwage. There is clearly a divide on the thoughts of raising minimumwage to make things more even. What our group wants to question here today is the raise of minimumwage to the federal average pay rate. In the United States after researching 426,448,460 people in more than a thousand occupations the average pay rate would be $20.60. (United States Department of Labor 2013) Thomas Sowell says it best,
`“Unfortunately, the real minimumwage is...