The global meltdown and the general raise in the cost of living places the low-income families at the disadvantage (Leigh, n.d.). There has been a great debate from the opponents and proponents of the raise in the minimum wage demands. For the opponents, the raise in minimum wage would increase the prices of goods and services, while increasing unemployment rates. However, the minimum wage rates should be raised by the government, since it offers more benefits that its disadvantages.
Read also Factors Determining Minimum Wage
Raising the minimum wage rates is a way of creating an economic stimulus in the country. Most of the workers who earn minimum wage hardly have money to save; they cannot get access to decent housing and can barely afford better insurance cover. If the minimum wage rates are increased, the disposable income is increased. An increase in the disposable income means most of the people who were living on the minimum wage will be able to spend more on consumables, housing and healthcare among other things. This will produce a ripple effect in the country’s economy in all the sectors.
An increase in the minimum wage increases propensity to spend among the employees. This means more goods and services will be bought and businesses will be able to raise more money. The increased consumptions of goods and services will force the industries to hire more workers to keep with the increased need for the goods and services. Thus, an increase in the minimum wage will create more job opportunities across all the sectors of the economy. Although the opponents of the increase in the minimum wage asserts that the organizations will be forced to look for money to compensate on the increase in the wages, and eventual layoff of workers to make room for the increase, the increase in sales will serve to compensate companies to meet the extra wage demands.
The move by the federal government to increase the minimum wage will serve as a reprieve to the government and the employees who survive on the minimum wage rates. Most of the minimum wage earners depend on the government for them to run additional social programs for them to be able to support themselves and their families on such minimum wages. By raising the minimum wage, the government will empower the low-income people who are dependent on the social programs to support themselves without depending too much on the government. As a result, the government will be able to save more from such programs, meaning more funds will be at the government disposal to be spend on other needs. In addition, the raise in the minimum wage will reduce the tax burden on the citizens. Most of the social programs that serve the low-income populations are derived from government taxes. Therefore, raising the minimum wage will empower the low-income populations to be self-reliant thus reducing taxes on the general population.
The organization compensation strategies as discussed earlier above, has profound impact on the employee turnover rates. The increase in the minimum wage by the government will increase job satisfaction and stability among the employees. Those employees who make higher minimum wage are less likely to quit since they will feel more satisfied and comfortable with their minimum wage jobs. Moreover, the lower turnover rates offer more advantages to the organization. The organizations will spend less money in hiring and training of new employees.
The United States has witnessed a steady increase in the inflation rates over the past three decades. While the inflation has increased every year, the minimum wage has only been raised three times over the past three decades. The increase in inflation has seen the increase in the cost of living and the general rise in prices of commodities. There is need for the minimum wage to be increased in order to cushion the employees who depend on the minimum wage to take care of themselves and their families. Moreover, increasing the minimum wage would allow such families to spend more and have some income left for their savings. In conclusion, it is imperative that the government increases the minimum wage in the country. According to (Leigh, n.d.), the current minimum wage is unsustainable as the cost of living and prices of commodities continue to spiral out of control. Increasing the minimum wage will help in lifting the low-income earners above the poverty line. Moreover, increasing the minimum wage will increase the propensity to spend and consequently boost the overall economic growth in the country, more jobs will be created and the government expenditure on social programs that support the low-income earners will reduce saving the country millions of dollars to be spend on other needs.