What is the Effect of Raising or Reducing Minimum Wage?

The government specified statutes to maintain the lowest rate at which labor may be employed is addressed as minimum wage. The rate that is mentioned in the wage system is in terms of period, the scope of coverage and the amount that can be offered at monthly, weekly, or on an hourly basis.

A concept like minimum wage exists in the form of legislation in more than 90 percent of all the countries across the globe. Politicians have struggled a lot to establish a certain face value of wages. But the economists know that any change in minimum wage will account for the negligible effect.

What are the effects of Minimum Wages?

Higher wages can have a retrospective effect on small businesses. So, read on to find what changes when there is a slight or rigorous change in the minimum wage.

1. Low-Income Workers are benefitted

As it has always stayed an economical as well as a political topic around the globe, permutations and combinations show that changes in the minimum wages are helpful for low-income workers. Some students do part-time works get great help when minimum wages are raised and, others who support their families fall in the same line too. Increase in minimum wages boosts up the earnings of an hourly wage to meet the necessary ends.

2. Unemployment is a ready effect

With the increase in the minimum wage, there will be a time when companies would have to pay a lump-sum amount of money which they need not have to in recent past. In return, there may be a detrimental effect where employers will hire a limited amount of employees and contribute to the already troubling issue of ‘unemployment’.

3. Inflation can be the root word to poorer society

Once the price of goods and services increases, the minimum wage does not move upward at periodic duration. It is inversely proportional to the cost of living. As it becomes smaller and smaller, the cost of living increases too.

4. The profitability of businesses is reduced

The one final drawback when the minimum wage is hiked is that it will directly affect your business. It is a general calculation though. If a company has to provide more income to labor, then the profit has to fall. This, in turn, puts pressure upon the inflation rate.

On a good term, it is often seen that when the minimum wage is increased, there is less absenteeism seen. There is a lot more effort into workers’ productivity. Minimum wage is a global concept where some of the countries acknowledge its hike, and some see it fall at the counterpart. The rise in the minimum wage creates a ripple effect afterwards. You do not find the certainty as it varies from person to person.

Minimum wage is an essential ground upon which a lot of workers depends and their families too. The legislation should bear the issues retaining it rather abruptly abstaining it from expanding. But it is a necessary evil. If you make an increase in the wages of workers, business profits will definitely fall. But the increase in it adds to true workmanship and perfect work culture!

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At Timeless Issues we share our thoughts about day to day life in America. Decline of values in morden society, causes of homelessness in America. Read the American thoughts what a American think about America on Timeless Issues.