The issues that surround the job market are of the paramount matter at the present society. The job markets are daily surging done with flood of job seekers dawning in every office to try they lack. The fact is that job opportunities have become highly scarce. However, increased minimum wages may lead to increased levels of unemployment.
Due to increased demand for the job opportunities, the employers are much advantaged of the recruitment processes of new employees. The employers take not only the advantages of getting the best employees due to the greater number of applicants with great credential and experience, but also have the opportunity to exploit these applicants on salary settings. Basing our views on the purpose of the job acquisitions as to have mutual benefit, then, it becomes paramount to establish some standards that govern the association of the two parties. As the conditions of the poor job seekers prevail, there are some high chances of vulnerability to exploitation by the greedy employers in their struggle for substantial profits. (The Department of Labor, 1999) However, there are quite some contradicting environments where most people have been faced with dilemmatic situations of creating more employment opportunities and maintaining of minimum wages, which enables the uplifting of the living standards of the impoverished persons. Increased minimum wages may lead to increased levels of unemployment
This paper is therefore dedicated to explore the whether raising of the minimum wages has impacts that lead to higher rates of unemployment, hence worsening the situations and number of people living as unemployed persons.
The debate over the increment of minimum wages is one of the heated arguments that have been persistent over several decades. There are a good number of people who believe that increasing of minimum wages would have negative impacts on the employment sector. This has lead to scholars and other academies to carryout several researches concerning the claims. However, the studies on such issues has not been authentic and convincing enough to most of the people to clear off their doubts on deteriorating effects of employment due to minimum wages effects. (The Department of Labor, 1999)
Pondering over this issue, many people have guessed that increase of minimum wages would automatically lead to corresponding results of hike levels of unemployment. While the wage transitions have always been put into the practices, there are numerous results which have been of surprise. Since 1990, the United States had a number of its states advocating for minimum wage hiking. As researchers have found wide information that bring harmonization of the issues of minimum wages and employment.
During the year of 1990, the Oregon community raised its minimum wages of the employees’ making a change of the original wages to swift upstream by 45 cents. The consequences of this were an increase in the rates of unemployment by 1.1 points. the consequences of 1.1 points job decreases perhaps presents a negative picture of the issue. although the Oregon states had sad view by the thinking that the problem was associated with the hiking of the minimum wage, it become apparent in the same year the unemployment rates was even worse than that of the Oregon. This was portrayed as at 1.4 points. This depicted the efforts that the Oregon’s had devoted to the creation of the job opportunities. (The Department of Labor, 1999)
The year of 1999, several other states imitated the same policy of minimum wage increment. Some of those states which got involve in increasing the minimum wages included California, Connecticut, and Delaware. During this particular year, there was certain result that was in similar manner to those of Oregon in the three states. This means that the rates of unemployment went up within the entire three states in a correspondent manner as that of Oregon.
In respect to the national results of that year, the rates of the unemployment were perceived to have accelerated at even greater rate than that of the three states. The performance of the employment of those enormous nations was more appreciable than that of the nation wide considerations. More so there are certain other countries which had outperformed the expectations of the pessimistic ideas, that is, maximizing minimum wages results to low employment rate. (The Department of Labor, 1999)
Contrary to the realism approach on increase or maintaining the rate of employment at normal rates, there is an overt result that showed that employees’ favorism may cause tremendous impact on the unemployed. For instance, the Hawaii state attempted to make a change in the minimum wages which really reverted to be havoc the left many unemployed person languishing in search of jobs. The Hawaii states was depicted to have been experienced the worst year of unemployment during the 1996 when it declared minimum wage increment. (The Department of Labor, 1999)
Why increase of minimum wages may lead to increased rate of unemployment
The raising of minimum wages to the employees implies the improvement of the level of those who are already absorbed in the job market system. The minimum wage setting is mainly targeting the persons whose live styles are at their abysmal points. According to the research, the live of mankind begins with the satisfaction of the basic needs. Therefore the minimum wage increase would thus make it possible for those employees whose living styles were being jeopardized to improve. The practice of setting minimum wages to the employees creates an environment which is sometimes stressing to the employers. As the wages setting acts as an obligation to the employers to pay certain amount of salaries, most companies withdraw from acquisitions of new employees.
The developed the fear of incurring major losses through labor costs. The employers therefore withdraw and halt their activities of recruiting of new labor force. In addition to cutting the recruitment process, they also lay off some workers in cases where declining profits are being experienced. Over the time, the number of individuals who get affected and hurt comprises of those who were employed at first and even those who had anticipated jointing the employed category. (The Department of Labor, 1999)
Reason that may lead wages increases to have decreased unemployment
When minimum wages are increased, the small scale businesses are supported as well as large scale businesses. The worker force is always craving for better payments. This means that minimum wage may fall below the employers’ targeted to pay his workers. The employers thus feels relieved from the obligation of that may arise from the labor forces demanding for increased payment. This secures the employers from unethical salary demands, hence, the employers retains the sole decisions of acquiring more and new employees as cheap labors. (The Department of Labor, 1999)
The increases in the minimum wages to the employees can also be a strategy that the government may employ to serve as uniting factor of balance between the employees and the employers. While minimum wages increment is crucial especially to the employees, it proved equally relevant to the employers who have the capability of making preset wages. The employees especially the poor find it a useful way improving their living standards through the increased earnings.
The wages increases is of advantage to the employers as this always acts as an incentive ton the employees. Employees thus get motivated to work an extra mile towards achieving the company’s goals and vision. The results of this can be replicated to higher profits and more jobs emerge with the increased production. Another handing, the increase in the minimum wages gives the employees the opportunities of getting extra coins which they can use for their investment creating a network of new job opportunities. (The Department of Labor, 1999)
The increase of the minimum wages has got Impacts on both sides of the employers and the employees. The kind of impacts is depending on some factors which do affect the systems of business operation. in case the wages ‘increment is not properly formulated, then, there are high possibility that wage increment would definitely causes a lot of problems of unemployment. Generally, the consequences of the increasing minimum wages impose the effect of reduction of unemployment or this maintains the status quo.
The Department of Labor, (1999): Impact on Special Minimum Wage Rates. Retrieved 24th February, 2009from http://www.dol.gov/dol/esa/public/minwage/special.htm