Raising the minimum wage.
In my opinion, I feel that the federal minimum wage should go up. The Fair Labour Standards Act FLSA, provides employers and employees they need to understand federal minimum wages as concerning all labour related issues. The federal minimum wage is set at $7.25 per hour (FLSA, 2009) for all workers in the federal, private sector, local governments and state departments. I believe that this minimum wage should be raised to $12 per hour. This, in my opinion, could have positive implications in the industry for all market players. This would also be advantageous to the industry because it would bring the wage floor back up to its relative value as was the case in the 1960s. This is after considering the inflation between then and now (D. Cooper, 2016).
Raising this federal minimum wage would have certain repercussions on employers. Employers would be able to attract more capable and productive workers. Ernesto Dal Bo et al. (2013) shows that offering higher salaries usually yielded in attracting a workers pool who had a higher IQ. Such employees are also likely to be motivated to work hard and thus be more productive. This results in higher turnovers for employers since such employees are motivated to work hard. Arindrajit Dube et al. (2007) in his research found that when an employee working in San Francisco who had their wages raised especially, those whose wages were low, were more likely to stick at their current jobs. Such an occurrence leads to a lower turnover that reduces the cost of hiring as well as training new employees.
Reich et al. (2007) in his study on effects of wage rise on low-wage workers, found out that there was improved service delivery from such employees. On top of this, Douglas M. Cowherd and David I. Levine (1992) found out that an increase in the pay of lower level workers relative to that of those in management positions increased the quality of production. The employee would benefit enormously from increased productivity rates since this would mean more business for the company which would ultimately drive up profits despite the high wage bill he or she is likely to encounter when he or she decides to increase the pay for his or her employees.
A raise in the minimum pay would also have repercussions on the employees. An increase in their pay would produce positive effects on the functioning of the low-wage market. Janet Yellen (1984) suggested that higher wages create a conducive environment for workers to be more productive, improved morale at the workplace. Such employees will be more keen as they go about their work since they feel that their employee has a right to quality services since tin return they are getting a good pay. A pay rise would improve employee satisfaction. This is because this pay would help employees to manage stress. This is because, in most cases, employees are faced with hard questions on how they will provide for the families, how they will take care of their needs as well as how they are going to afford a comfortable lifestyle for example how to take care of their medical bills. If the employer takes care of this, such employees will be satisfied at their workplace since it offers a work-life balance.
A pay rise on the federal minimum wage would also have an impact on the economy. A pay rise would result in more money in the pockets of low-wage workers. These employees would consequently spend this money on food, housing and other necessities. This would create a demand for goods as well as services. This would stimulate the economy thus help create business opportunities for other market players. Despite this, there is always a concern that such an increase would result in an increased cost of living in terms of costs of basic goods since the cost of production would increase. Despite these factors, the economy would improve and it would lead to a much-satisfied economy where all market players are satisfied.
References
Akerlof, G. A., & Yellen, J. L. (n.d.). Introduction. Efficiency Wage Models of the Labor Market, 1-21. doi:10.1017/cbo9780511559594.001
Compliance Helpance – Wages and the Fair Labor Standards Act (FLSA) – Wage and Hour Division (WHD) – U.S. Department of Labor. (n.d.). Retrieved from http://www.dol.gov/whd/flsa/
Cowherd, D. M., & Levine, D. I. (1992). Erratum: Product Quality and Pay Equity between Lower-Level Employees and Top Management: An Investigation of Distributive Justice Theory. Administrative Science Quarterly, 37(3), 524. doi:10.2307/2393467
Dal Bo, E., & Dal Bo, P. (2013). Workers, Warriors and Criminals: Social Conflict in General Equilibrium. SSRN Electronic Journal. doi:10.2139/ssrn.594562
Dube, A., Naidu, S., & Reich, M. (2007). The Economic Effects of a Citywide Minimum Wage. ILR Review, 60(4), 522-543. doi:10.1177/001979390706000404
The impact of raising the federal minimum wage to $12 by 2020 on workers, businesses, and the economy: Testimony before the U.S. House Committee on Education and the Workforce Member Forum | Economic Policy Institute. (n.d.). Retrieved from http://www.epi.org/publication/the-impact-of-raising-the-federal-minimum-wage-to-12-by-2020-on-workers-businesses-and-the-economy-testimony-before-the-u-s-house-committee-on-education-and-the-workforce-member-forum/
