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Critical analysis of minimum wage - Research Paper Example

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Critical Analysis of Minimum Wage Name of Course Your Name Your University Introduction This paper examines the concept of minimum wage from an Economics point of view. In doing this, the paper will begin by defining the concept of minimum wage and its corresponding meanings…
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Critical analysis of minimum wage

Download file to see previous pages... Definition of Minimum Wage The minimum wage is the lowest level of pay that an employer can pay to the employees as stipulated by law. It is defined by the International Labor Organization as “the lowest level of remuneration … which each country has the force of law and which is enforceable under threat of penal and other appropriate sanctions. Minimum wages fixed by collective agreements made binding by public authorities are included in this definition”1. This indicates that the minimum wage is the level of pay or compensation given by employers to their employees as stipulated by the laws of the land. The minimum wage is included in the laws of a given nation and it has the force of law. Hence, if an employer decides to pay his employees below the lowest minimum wage level, the government and law enforcement authorities can take action against the employer and subject him to prosecution. The minimum wage include wages that are fixed by collective agreements. This include various interest groups and stakeholders who come together to fix the minimum wage through various agreements. Once the government gives it the assent, it becomes law and no employer can pay a salary below the minimum wage. The minimum wage is the price floor that sets the minimum hourly rate for employees2. The minimum wage is meant to promote equal opportunities in a country and help to bridge the gap between the rich and the poor. There are two main implications of the minimum wage3. First of all, it is a way of fighting poverty because it guarantees the price floor, below which it would be illegal to pay an employee. In other words, it prevents employers from exploiting the extremely poor people in society. This is because such persons are vulnerable and are willing to do almost anything to get paid and to survive. Hence, they are susceptible to manipulation and exploitation by the rich employers. Due to this, the minimum wage is seen as a tool that is used by the government to prevent the poor and the less skilled from being exploited by the rich capitalists and business owners. On the other hand, it can reduce employment amongst the low-skilled since there is the tendency that businesses would fold up when they are forced to pay a minimum wage. In effect, there is the risk that more low-skilled persons could get out of work due to the minimum wage. Thus, a government would need to blend the two implications and come up with an appropriate minimum wage that would protect the rights of the extremely poor in society and also prevent job losses in the economy. History of the Minimum Wage The minimum wage was established in the laws of the United States through the Fair Labor Standards Act (FLSA) of 19384. This law is described as the basis and the bedrock of labor protection regulations and social welfare provisions for the less skilled workers. This is because it came into force to protect the American people who were less skilled and stood the greatest risk of being exploited by their employers. In effect, the Act was issued to protect the least powerful section of the United States' society. This protected them from exploitation by their respective employers. The FISA was meant to cover full time and part time workers in private sector, federal, state and local government positions throughout America. This means that the Fair Labor Standards Act (FLSA) of 1938 was designed to have a universal application and it ...Download file to see next pagesRead More
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