Assignment and paper draft Essay Example | Topics and Well Written Essays - 1250 words

Assignment and paper draft - Essay Example The effects are analyzed from the perspective of employees, employers, and the government. Each of these players has a different view regarding high minimum wage. The paper uses an exploratory approach to finding relevant facts related to the study. Sources such as books, press releases and Low Wage Commission reports were perused in order to strengthen the understanding of the concepts at hand. Jobs whose value cannot be sustained in the face of the minimum wage are likely to be eradicated. Employers may fail to pay the high wage rate for jobs that are not essential to a company. Scaling back the number of employees will in turn increase social dependency. Also, it reduces the purchasing power of individuals thus stalling economic growth. High wages stimulated mass consumption because people have more purchasing power. Mass consumption leads to excess demand. In order to satisfy the demand, industries expand and also start new plants. The effect is an increase employment and also the national income. The calculation of minimum wages considers the severity of inflation and other economic conditions. As such, setting a high minimum wage places all the employees above the poverty line. The minimum wage is set at a value where people can afford the necessities to live a comfortable life. All these add up to better living standards. According to Waltman, business costs increase as a result of an increase in the minimum wage. Some business are unable to maintain the high cost of human resources (19). As a result, they tend to increase the prices of commodities in order to maintain their profitability. A 2010 study conducted by the Low Pay Commission of the UK concluded that high minimum wage reduces the wage gap between the highly paid and the lowly paid workers (39). The Commission found that 40 percent of the lowly paid workers were moving towards the middle-income status. The above discussions show that the