Discussion on the Minimum Wage

Minimum wage
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Introduction
Minimum wage is the bare minimum pay that employer can pay to workers per hour for work. States and federal government have the mandate of setting and reviewing the minimum wage. The federal minimum wage stands at $7.25 for each hour. However, there are other states with elevated minimum wage than the federal minimum wage. California State has the uppermost minimum wage of $10 per hour, while Emeryville, CA has the uppermost minimum wage of $10.4 per hour. Minimum wage is important as it protects workers from unfair employment practices. Moreover, minimum wage raises worker’s wage and reduces poverty, however, it is suggested that minimum wage reduces the employment rate (U.S. Department of labor, 2011).
Minimum wage is argued to increase income, alleviates people from poverty, and improves the living standards of low-income families. Moreover, the minimum wage aids in reducing the gap between the rich and the poor. The minimum wage boosts the people’s incomes and decreases the wage variation among employees. However, Sabia argues that the minimum wage is not effective in alleviating the overall poverty rates among workers. Sabia states that the minimum wage increases the cut of the work available to low skilled workers. Several firms counter the minimum wage increases by replacing the low-skilled workers with higher-skilled workers who are capable of multitasking, hence reducing the company costs. Some firms adopt automation that eliminates the need of employing workers to undertake those tasks. Moreover, small businesses and firms are argued to be the worst affected by minimum wage raise. Large amount of small firms earnings are spent on paying operating costs, such as workers wages, which is the largest cost of small firms. Consequently, when the minimum wage increase small firms to respond by lowering the levels of employment and cutting jobs. In addition, minimum wage increase does not reduce poverty, because people who have benefited from minimum wage increase stil...