Minimum wage refers to the lowest amount of remuneration which employers are required to pay their workers for the tasks accomplished. It is set by policymakers to protect both the employers and the employees. Minimum wage laws are set to guarantee the workers a salary that can sustain a decent standard of living for all workers(Meer, & West, 2016). The minimum wage can be adjusted upwards or downwards depending on the condition of the economy. There are various factors which should be put into consideration when setting the lowest pay which employers should pay employees to ensure that it meets the purpose for which it was established.
However, the minimum wage law may not necessarily be the best solution of reducing household poverty. Several businesses operate at razor-thin margins, and raising the minimum wage would be detrimental to their operations. In such a case, they would have no option but to fire people which would reflect in rising unemployment levels. It may also force businesses to down shutters permanently. It would hurt consumers of products and services as firms and individuals providing these may prefer to pass on the extra burden down the line and raise prices(Meer, & West, 2016). Raising minimum wages also makes the case for more automation stronger as firms decide to use machines in place of humans which would economically insufficient.
Other different ways that can be used to reduce household poverty would be that of regulation of the pricing of products and services. One of the reasons as to why there is poverty is because the prices of commodities are higher as compared to the income people get. A second viable way would be that of the introduction of affordable housing by the government. Citizens always suffer due to lack of homes and ends up spending much of the money they get on rents. With the introduction of the two, household poverty would decrease where the money that employees get will become sustainable to them.
Meer, J., & West, J. (2016).Effects of the minimum wage on employment dynamics. Journal of Human Resources, 51(2), 500-522.
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