Alternatives to Minimum Wage Essay 2022

Running head: ALTERNATIVES TO MINIMUM WAGE
ALTERNATIVES TO MINIMUM WAGE
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ALTERNATIVES TO MINIMUM WAGE1
ALTERNATIVES TO MINIMUM WAGE
One of the basic requirements for any sort of economic production is labor, and the
minimum wage policy ensures the non-exploitation of this particular facet. By definition, the
minimum wage policy is the legally mandated lowest amount of remuneration that should be
paid to a laborer on an hourly basis for the worker to accept the work (Belman and Wolfson).
Built for the benefit of the economy and the laborers, the policy has certain contentions and
to avoid these, there are certain alternatives as well. The essay argues for the implementation
of the alternatives of the minimum wage policy that maintains an efficient development of the
economies as well as prevents the laborers from being exploited.
The minimum wages were launched with the motive of terminating the exploitation of
the laborers, accompanied with the long-term intention of aiding the lower income families,
and was first initiated in Australia and New Zealand in the 1980s. The policy is in effect in
several jurisdictions globally, however, there exists polarities in opinions regarding its
implementation (Neumark and Wascher). The benefits of the execution of this policy
includes heightened standard of living for the lower income groups, diminishing their
financial stress, has an optimistic impact on small industries, stimulation in consumption
among poorer classes, coherence in work ethics, morale-boost to workers for joining any
workforce and so on.
The detractors, on the other hand, claim that the increase in minimum wages are not
as productive as imagined. (Meer and West) The minimum wage structure often fails to
decrease unemployment rates. If the wage rate is above the general equilibrium, it will not
only generate frictional unemployment, but also high wait unemployment due to the demand
for the labor being lesser than the supply of labor. A surge in the minimum wage rate may
also culminate in a decreased yield and growth of industries as firms might prefer investing a

ALTERNATIVES TO MINIMUM WAGE2
greater deal in capitals than labor. Due to increased minimum wage rate, there would be a
boost in the labor force, consecutively decreasing capital per labor thereby decreasing output
per capita. (MaCurdy) Minimum wage increments also are not always efficient mechanisms
for reduction of poverty, as it is not directly related to diminishing poverty. Employees
gaining from the minimum wage structure might not necessarily belong to the below poverty
level and might cost some low-income workers their jobs due to higher skilled levels. The
policy also might lead to inflation as the producers can increase the price for their products to
compensate the increased cost for laborers.
There are certain controversies surrounding the implementation of the policy in
various economies (Mărginean and Chenic). For instance, in cross-cultural employment,
there are laborers from diverse economic backgrounds and it is often viewed that the natives
of the country where the organization is based are paid the minimum wages accordingly
unlike the laborers from other countries and cultures. Similar disparities in the payment of the
laborers can be found among the multi-national corporations, which often expand in third
world countries for employing cheaper labor. There are discrepancies in the minimum wage
rate among organizations belonging to backward economies that fail to provide the laborers
with minimum wages due to poorer company yields. Therefore, resulting in the overall
failure of the policy objectives in certain cases.
The policy thus is not as efficient as claimed, has more downsides to it than benefits,
and thereby is controversial in nature. (Ganong and Jäger) In order to avoid the detrimental
aspects of the minimum wage policy, there are certain alternatives that can be implemented
for securing the similar objectives, such as increment in the Earned Income Tax Credit
(EITC), diminishing the premiums of health insurances, implementation of training programs
for the minimum wage workers, reduction of taxes for small-scale business organizations and