Impact of minimum wage on poverty

Running head: ECONOMICS
Economics
Name of the student
Name of the university
Author note

2ECONOMICS
Impact of minimum wage on poverty
Introduction
Thesis statement: It is necessary to increase the minimum wage as it will help in stimulating
the economic growth and will decrease poverty.
Minimum wage is the lowest wage which an employee is paid for working per hour.
It can be also termed as the minimum amount of remuneration which an employee should be
paid for the work that is done in a given period. The aim of the paper is to explore the
positive as well as the negative effects of minimum wage on poverty and employment in the
developing countries. The paper also states whether minimum wage is an efficient tool for
reducing poverty.
Historical context
The annual gross income of an individual who is working for 40 hours in a week
earns a minimum wage in Canada of about C$22,880. The first modern minimum wage had
been established by the minimum wage policy in New Zealand in the year 1894 (Gindling
2018). A rise in the minimum wage is known to reduce poverty among families. The
minimum wage rate in case of the United States of America is $7.25 per hour as of 2017. The
minimum wage law have been first used in New Zealand and Australia for raising income of
the unskilled workers. Under the Canadian Constitution, the responsibility of enforcing
labour laws along with minimum wage known to present in the provinces and territories. The
federal government of China used to set minimum wage rates before. The minimum hourly
rate in Alberta is $15, where in British Columbia it is $12.65 which was effective from 2018.
The highest minimum wage in Canada is around C$31,200 in Alberta.

3ECONOMICS
The union dues are the regular payment of money which is made by the union
members where the cost of membership is termed as dues. One of the most famous labour
unions was formed in 1886 by Samuel Gompers which is the American Federation of Labour
and the first trade union originated in Britain in the 18th century (Schnake et al. 2016). The
union dues are therefore the regular payment of money by the union members as the
membership cost. The federal government of China used to set minimum wage rates before.
However, in the year 1996, it was redefined as the general adult minimum wage rate. In case
of Ontario, workers are need to pay union dues when majority of workers in the bargaining
unit have affected the vote in order to make it successful. At present there is absence of any
laws which requires employees to become union members. In Alberta, Nova Scotia and in
British Columbia mandatory union dues are permitted to be bargained.
Michale young in his book “ The rise in Meritocracy” stated that meritocracy will
perpetuate inequalities (Young, Michael 2017). It is the political philosophy which states that
economic power and economic goods should be vested in individuals on the basis of talents,
achievements and efforts except race, gender and wealth. Although the concept had been in
into existence for long period , the term was introduced by sociologist Michale Young in the
year 1958. The western society known to have divided the class as upper class, middle class
and the lower working class.
Supporting arguments
Increase in the minimum wage in case of developing countries will either decrease or
increase poverty depending on the characteristics of the labour market. Minimum wage will
affect poverty positively when the minimum wage earners are the heads of low income
households. When the wages of the informal sector increases due to rise in minimum wage,
it will help in reducing poverty (Dube, Arindrajit 2017). Also, when the job loses in the