Introduction
The minimum wage is the lowest amount of money organizations are legally allowed to pay. Even though it may appear to be obvious that raising the minimum wage is beneficial, there are some considerable negative consequences, too. Many believe that the minimum wage should be increased, and others strongly disagree. It may be necessary to evaluate possible advantages and disadvantages to develop a clear decision regarding that relatively controversial dilemma. The minimum wage is closely linked with the most financially vulnerable segments of the population. It provides people working in underpaid jobs with the required money to afford basic products and services. However, legislation that regulates minimum wage is frequently violated by organizations and businesses. Hence, it may be vitally important to not only maintain a decent rate of remuneration but also enforce compliance with the law.
Minimum Wage in Los Angeles
As already mentioned, it may be critical to evaluate the basic needs of the population precisely and provide sufficient minimum wage. In Los Angeles, the minimum wage is set to $13.00 an hour. Standard working hours are 40 hours a week and approximately 172 working hours a month. Therefore, the current minimum wage provides workers with $2,236 monthly and $26,832 annually. Considering housing prices, rising demand for basic products, and increasing expenditures, such a wage may not meet the basic needs of an average person. Moreover, it may be beneficial for Los Angeles County in terms of socioeconomic aspects. Minimal wage is closely linked with the quality of life and labor productivity. The state of California should consider increasing the minimum wage as it may improve standards of living, positively influence wages in general, maintain the economy by increasing demand, and ensures fair pay for low-income workers.
Minimum Wage and Standards of Living
It is believed that a higher minimum wage may significantly improve the quality of life. It may also be supported by the fact that most metrics designed to measure standards of living consider minimum wage. The “fight for 15” movement consistently gains momentum and drags more and more attention in North America. The movement was started to achieve the goal of increasing the minimum wage to $15 (Caleb). Minimum wage, indeed, might be an essential part of programs, which aim to improve quality of life. First, well-paying jobs provide access to better food quality, proper housing, and education (Caleb). Moreover, citizens may access adequate health care. People may be able to not only visit healthcare facilities more often but also access a higher quality of medical services. These life improvements, in return, may positively influence the economy. A worker with access to decent nutrition and healthcare may be absent from work less frequently. Access to education may provide the state with needed specialists and a highly educated workforce. General happiness rates and contentment with life quality may also increase the productivity of employees.
Higher minimum wages are frequently an indicator of developed countries. It may not only improve the quality of life but also provide the economy with highly productive labor. It may be necessary to address the issue of underpaid jobs to achieve these goals. Moreover, introducing strict regulations and inspections to prevent violations of labor legislation may be beneficial. In many cases, increasing minimum wages do not provide visible improvements due to insufficient enforcement of labor laws.
Minimal Wage Influence on Wages
Minimal wage rates have a significant impact on the economy in general and particularly on median wages. A rapid increase in minimum wages may have unpredictable and even disastrous consequences. Costs, prices, and wages are closely linked and considerably depend on one another. Studies have shown controversial results regarding the influence of minimum wage on the labor market (Grau Veloso et al. 3). Nevertheless, most of these studies prove that minimum wage is directly proportional to median wages and mean wages, even though the ratio depends on a wide variety of factors. It may be essential to take the fact that everything is connected in the modern economy into consideration. A hasty increase in minimum wages will inevitably lead to higher costs for organizations and businesses. Higher costs will influence the prices of products and services provided by these companies. Higher prices may provide growth in money flow and increase wages in general. However, increased prices may also directly affect the purchasing power of the population and require further raises of minimal wages to maintain decent life quality.
Such a “vicious cycle” may provide very little benefit to the population and cause hyperinflation. Hence, it may be necessary to conduct a comprehensive analysis and evaluate as many aspects as possible to determine the optimal minimum wage. Even though it may represent a complicated and time-consuming process, it may be beneficial for the majority of the population. From that perspective, the primary function of minimum wage may be to prevent the depreciation of labor and maintain financial equality without harming the principle of competitiveness. Determining minimum wage should represent a balance between these two opposing aspects.
Effect of Minimum Wage on Economic Growth
Raising the minimum wage may significantly contribute to the development of the economy. As mentioned before, various economic aspects are closely linked. For example, increasing the minimum wage may lead to higher consumer spending. Low-income employees tend to spend a higher percentage of additional payments than people with higher income (Pettinger). Therefore, most of the money spent on raising the minimum wage will return to the economy as a buying force. Higher spending may significantly increase money flow and boost economic growth. Nevertheless, it may also be possible that higher minimum wages increase unemployment. It is believed that organizations may reduce the number of employees to lower labor costs if the minimum wage is increased. Such correlation is debatable as higher minimum wages may also improve productivity and attract a broader workforce reducing unemployment (Pettinger). Experience in other countries has shown that, in reality, unemployment is in inverse proportion to minimum wage. Increasing employment is another essential aspect of economic development.
Minimal Wage impact on Inequality
Minimal wage may positively influence the provision of fair payment and wage equality. Recent research has shown that there is a strong correlation between increasing the minimum wage and lowering hourly wage inequality (Redmond et al. 21). In many cases, some working activities are undervalued, and organizations provide a very small percentage of generated profit to their employees. Minimal wage may directly address that issue and prevent underpaying. It may be necessary to establish a higher minimum wage to provide equal opportunities for citizens. In addition, it may reduce poverty, which has a great destructive impact on national well-being in terms of health, economy, and labor productivity.
Possible Problems
Raising the minimum wage may also have some considerable unwanted consequences. Increasing the minimum wage at rapid rates may lead to higher inflation, which may reduce all the possible benefits to zero. In some cases, it may also cause unemployment as corporations may reduce the number of their workers. It may affect the prices and destabilize the economy, leading to insufficient supply and possible crisis. Moreover, it may result in higher labor market competition preventing younger people with less working experience from obtaining a job. Therefore, it may not always serve its primary goal of providing equal working opportunities. However, these issues are mostly related to excessive and inappropriate raises in the minimum wage. Taking various aspects into consideration, carefully analyzing the labor market, and developing a comprehensive legal framework may prevent these potential problems from occurring.
Conclusion
Minimal wage is an important norm that prevents work undervalued. Current standards existing in Los Angeles may provide insufficient legal support for workers with low income. These people may not be able to afford basic needs, decent housing, or healthcare. Hence it may be needed to increase the minimum wage in the state of California and Los Angeles in particular. Such legislative improvements may not only positively influence the economic aspects of the region but also maintain various social benefits. It may bring the standards of life to a higher level and increase the average income of citizens. Economy development and a decrease in poverty also represent possible consequences. Even though such decisions are controversial and there is a large number of potential problems, the harm may be minimized by a detailed analysis of the market before the implementation of legal frameworks. Conclusively, increasing the minimum wage in Los Angeles may be beneficial in many sectors of society and should be considered on a governmental level.
References
Caleb, Nithya. “A Minimum Living Wage Means Better Quality of Life for Everyone.” The Edge: A Leader’s Magazine, 2017. Web.
Grau Veloso, et al. “The effects of the minimum wage on employment and wages.” (2018).
Pettinger, Tejvan. “Effect of Minimum Wage on Economic Growth, Inflation and AD/AS.”Economics Help. 2019. Web.
Redmond, Paul, et al. “The Impact of a Minimum Wage Change on the Distribution of Wages and Household Income.”Institute of Labor Economics, 2019. Web.