The Concept of Minimum Wage: A Sociopolitical Disparity amongst Economists

It always chimes to have a Law ensuring optimal Wage for Everyone.

Initially published by Illumination on Medium

A wage or the employer distribution of security derived solely from others paid to an employee is the primary way most people on our planet thrive. Almost all of us work hard for what we earn, but our sweat and blood earnings do not always yield the fair value of our hard work. In a free and minimally regulated economy, we expect the market to adapt eventually, and we earn what we deserve. Nevertheless, wage fairness is becoming more scrutinized amid all the prevailing legalized monopolies such as economic rent , the Fiat money , and licensing practices . That is why some turn into the artificial manipulation of minimum wage.

According to some, the minimum wage means the lowest remuneration an employer is obliged by law to pay their employees for the work performed during a given period. One can never lessen the minimum wage by a collective agreement or an individual contract. It is the prevailing assumption that the minimum wages insure workers against unduly low pay through an equitable share of the product of advancement and a minimum living wage to all employed who need such protection. Some consider minimum wages to be one facet of a strategy to withstand poverty and reduce socioeconomic inequality among citizens.

But what is the best way to price-fix human talent and skill?!

What is the best minimum wage that can be set without negatively affecting the economy and preserving justice?

Photo by Ehimetalor Akhere Unuabona on Unsplash

Optimal minimum wage policies may promote social justice, but there seems to be no magic number despite current political rhetoric. Past experiences indicate that mismanagement can have considerable adverse economic and social consequences.

Minimum wages increase the earnings of low-paid workers, reduce the number of “working poor,” reduce the gender pay gap in the lower part of the distribution, and reduce overall wage inequality in the short run. However, the long-term downside is setting off price inflation, hurting employment, and becoming unenforceable by small- and medium-sized businesses.

The controversy over minimum wage seems to depend on a pragmatic approach to its economic upshot ultimately. Hence, most reliable research on living wages suggests that the impact is subtle.

There has been a slight employment loss in the most significant cities with the broadest-based living wage policies. Given these results, prospective studies would best acknowledge that offsetting factors and modest costs for employers result in only limited job losses from a living wage policy. Under a living wage policy, ignoring the importance of offsetting factors will result in excessive fees and job losses.

Probably under a close economic system and where hypothetically speaking, everyone is a government employee, or employers are one hundred percent bound by government bureaucracy. We could expect some rationing for increasing the minimum wage.

Enforcing minimum wage affects overall economic inflation, but the verdict among economists is split. However, Raising the Wage uniformly in every state with vastly different economies will have drastically additional living costs. A uniform minimum wage could disproportionately impact a small business in a state with a low cost of living.

A survey of American Economic Association (AEA) members in 1992 indicates that 79% of respondents raising the minimum wage also surges unemployment among young and low-skilled workers. Although many economists recognized that low pay could be a real problem, they argued that no pay is more disastrous in the long run.

A newer poll of economists finds 74% of respondents opposing a $15/hr—minimum wage. Nearly a replica of non-economist public belief is virtually a mirror opposite.

The minimum wage is not fair, a killer of jobs, and the economy. For instance, if an employee is earning $2/hr. From employer x, if his actual value of work is $2.50/hr., then Firm Y would have an incentive to offer the same employee $2.01/ hr. Employer X would counter with $2.02/hr. The cycle would continue until the employee was paid $2.50/hr. No employer would bid higher because he was not worth it.

Youngsters, in general, withstand more from the minimum wage law than do grown-ups. Each subsequent increase in the minimum wage has poorly affected young unemployment rates. Just as the minimum salary attacks the young more than the old, it damages blacks more than whites.

Today, like many other topics, the subject of the minimum wage has taken a high seat on the political stage. It is one of many buzzwords coming out of the flapping lips of the politicians. It always sounds better to have a law ensuring that we get paid for what we deserve, but that is not exactly how we need to be rewarded for our aptitudes.