The minimum salary is the lowest amount that employees earn from their employers, changing from state to state across the United States. In the United States, the lowest payment is $7.25 per hour to cater to basic human needs. Government regulations on minimum wage affect the quality of life. Although some economists claim that the rate of unemployment rises and the cost of living goes high when the minimum wage is raised, the government should increase the minimum wage because it enhances economic growth and prevents employers from taking advantage of workers in low-income communities, overworking them on low pay. In addition, the minimum wage also helps individuals afford the basic human needs: food, clothing, and shelter, but it does not incorporate economic inflation.
The economy is the state of consumption, production, and distribution of resources within a country, commonly known as supply and demand. The balance between supply, demand, and distribution determines the state of the economy in a country. According to the graph (Bauducco et al. pp. 60), when the supply is low, and the quantity is high, the prices of products tend to go higher, and when the supply is high, and the demand is low, the cost of the product reduces, affecting the economic status. Surplus of goods creates a risk of losses causing products to expire and becoming unusable due to the low demand. The minimum wage prevents poverty by enhancing productivity, decreasing salary disparities, advancing skills training and self-improvement, diverse technological employment opportunities, and boost economic growth.
Although some claim that increasing minimum wage leads to fewer employees, companies aim to decrease labor expenditure, increasing the unemployment rate. The government should increase the minimum wage because it has continuously enhanced the economy and how it operates, for instance, protecting workers by providing enough salary to handle the cost of living comfortably. Raising the salary will improve the standard of living among workers creating a sense of fulfillment and satisfaction while enhancing literacy and life expectancy (Gindling 5). Contrary to popular belief on the rate of unemployment resulting from raising the salary, the level of adaption among human beings is higher; advanced job opportunities will emerge, creating better and dynamic opportunities when the minimum wage increases (Jardim et al. 16). Employees will improve their skills to adapt to the new and advanced technologies and opportunities.
Increasing minimum salary boosts economic growth due to the increased demand and revenue in businesses and increased employee productivity. Workers become motivated and enhance their work ethic when there’s a salary increment; this also causes less absenteeism and employee turnover enhancing productivity. Economic growth is the increase of demand for products and services as opposed to another time (Cengiz et al. 1408). However, businesses lay down employees due to economic growth, increasing the rate of unemployment. Workers then have to start competing over limited job opportunities, while other companies become bankrupt when they cannot operate the business with fewer employees
In conclusion, government regulations on raising the minimum wage in the United States negatively and positively influence the country’s economy. The economy of the country increases as employees can afford products and services supplied by different companies. Alternatively, increasing the minimum wage also risks the rate of unemployment and employment expense. The benefits of having adequate income outweigh the disadvantages. Their quality of life is significantly improved since people living in the country have access to more than the basic needs; hence, productivity improves. The rate of literacy levels increases as the quality of life is enhanced through increased lowest wages.
Works Cited
Bauducco, Sofía, and Alexandre Janiak. “The Macroeconomic Consequences of Raising the Minimum Wage: Capital Accumulation, Employment and the Wage Distribution.” European Economic Review, vol 101, no. 24, 2018, pp. 57-76.
Cengiz, Doruk, et al. “The Effect of Minimum Wages on Low-Wage Jobs.” The Quarterly Journal of Economics, vol 134, no. 3, 2019, pp. 1405-1454.
Gindling, T. “Does Increasing the Minimum Wage Reduce Poverty in Developing Countries?” IZA World of Labor, 2018.
Jardim, Ekaterina, et al. “Minimum Wage Increases and Individual Employment Trajectories.” National Bureau of Economic Research, 2018.