Advantages And Disadvantages Of Minimum Wage Laws

Minimum wage refers to the lowest remuneration set up by law that employer is legally bound to pay or offer to workers. This sets the price bar in the country under which the labour would not agree to sell the services. The law was initially invented by the New Zealand and Australia. The purpose was to maintain a minimum living standard for the workers who are unskilled. The people having unsound economical knowledge believes that this law can protect the workers from being abused and therefore can help in reducing the poverty. In many jurisdictions, minimum wage law is in effect and therefore it remain an ongoing debate whether minimum wage law has been proved as en effective tool or have brought disadvantages with it. The ones who support

The fixation of wages bind the company to pay the workers the minimum amount as the government has fixed. Such situations might contribute in increasing the costs of employers thus causing them to make adjustments otherwise. For instance, the employers can choose to adjust this cost by reducing the hiring of workers, reducing the working hours, minimising the benefits and allowances and charging higher prices in return to compensate the cost incurred. A number of policy makers are on the view that companies cope with the fixation of minimum wages and increase in the minimum wages by compromising on the profits but in most of the situations, this is not the case. In order to maintain their net earnings, the business look for a number of alternatives, that includes cutting employment and making other similar decisions. Thus the results that policy makers expect form the fixation of minimum wages doesn’t turns out to be the same due to the behavioural responses of the employers. The supporters of minimum wage imposition believes that minimum wage imposition is the technique to boost the incomes of full time adults who belong to low income families in order to better off their situation. But in contrast to the assumptions, in reality the data indicates that mostly the part time workers are young workers and are generally not from the low income background. Hence the policy ends up resulting in creating

The wage was set irrespectively of the will of the employers taking in consideration the needs of the labours to live a decent life. The labour with less productivity than the mandated wage was forced to find work in the industry that does not comes under the federal court order. The data show that for the rest of the decades, the unemployment rate was increased and it still remained problems for unskilled workers (Goodwin & Maconachie,