Minimum Wage Pros and Cons List

The minimum wage is the lowest possible payment an employer can give an employee for his services. While some believe this is an utter requirement for a capitalist society to work properly, others believe it is a controversial law that shouldn’t even exist.

In the United States there is a federal imposed minimum wage, and some states prefer to go above it, while others choose not to have minimum wage at all. Although same agree with this system, others point out major problems with it. So let’s get into it:

List of Pros of Minimum Wage

1. It Helps Families
According to economic studies conducted, forty percent of workers earning minimum wage in the United States were working parents. The minimum wage policy helps them out because employers are required to pay them at least this small amount. If it did not exist, they would be probably working for less money, and the children involved in this would have an inferior lifestyle.

2. Incentivizes Employment
An unemployed person is incentivized to get a job because he knows that he will earn at least an amount good enough to make a decent living out of. An unemployed individual can compare the earnings he gets from public assistance programs and then compare to what he would get from a minimum wage job. From that point onward, he would understand that he would be better off being employed.

List of Cons of Minimum Wage

1. It Boosts Unemployment
It is suggest by some economists that minimum wage imposes a barrier on cheap labor. Every business has limited funds, and if they have to pay a determined amount to every employee they have to limit their number of employees according to this amount.

2. Cuts Off the Lower Part of the Working Ladder
Minimum wage laws put low income and low skill jobs into levels of high earning, meaning that only experienced people will be hired in order for the training part of the job to be cut off. This means that people who do require some type of training will be left behind, meaning that developing employees won’t really be able to develop their skills.

On top of that, high minimum wages mean that employers will only want to pay for the best. People with poor work skills and limited experience will be out of the picture due to increased competitiveness of the market. This is especially tough on a social scale because young people ready to hit the working market tend to suffer the most because they have absolutely no experience. Finally, if an employer needs someone to perform small tasks that really won’t be too profitable for him, he won’t hire someone at high wages to do them.