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Minimum Wage Laws Essay

792 Words4 Pages

Many countries have implemented minimum wage laws, with the purpose of setting an amount that would help workers who belong to the lower socio-economic strata. These workers are usually the ones that have manual jobs which often pay the least amount of money. To ensure that such workers are not exploited and taken advantage of, governments put up laws which require employers to pay a set amount of money for work done, making it illegal to pay anything lower than the amount set. However, one major economic downside that results in the implementation of such laws is an increase in unemployment which further upsets other economic factors. This, among other things, shows that the introduction of legislation to repeal all minimum wage laws is a …show more content…

Some businesses find it difficult to operate with less workers, so instead of reducing the number of workers, they are forced into bankruptcy. When this happens, the accumulated revenue falls which reduces the country 's GDP. As minimum wage laws push up the costs of hiring labour, businesses prefer moving their headquarters and operations to countries where minimum wage laws are less strict or don’t exist at all. This is also called outsourcing (Amadeo, 1). This shifting of businesses abroad further pushes up unemployment levels as lesser jobs are available. Moreover, studies done on the impact of minimum wage laws clearly show that minimum wage laws lead to a reduction in the labour force participation rate (Brown, 139). The introduction of legislation to repeal minimum wage laws would also reduce poverty. It would motivate the younger generation entering into job markets to look for enriching jobs. An increment in the minimum wage is said to have a negative impact on all employees, and businesses. This negative impact is sometimes in the form of inefficiency displayed by the workers. When a minimum wage is set, workers don 't feel the need to work hard as they know that no matter how they work, they will still receive that minimum amount set. This further lowers the morale of the employees who want to work efficiently as their pay is the same as their

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