Throughout the years, minimum wage has become an issue that has been viewed in a more negative way. There are many positive effects, but positives are being outweighed by the negatives, with the many important effects of the positives being overlooked. The economy, along with individuals, have benefitted in more ways than one. Minimum wage opens up the opportunities of jobs being offered to those who would not otherwise qualify for the higher paying jobs, which require college degrees (Characteristics of Minimum Wage Workers, 2012). These individuals remain at the bottom of the pay scale and they are given the opportunity to make their contribution to the economy, while at the same time, providing for their families, and improving their skills, allowing them to become less dependent on the government for assistance. Minimum wage is not necessarily discouraging, as it does have many positive effects on the economy. 1- Create jobs for labor forces.
Working minimum wage does not always mean the worker is not qualified for a job, it sometime means they have the skills to get the job done but they do not have the qualifications to get them a higher paying job. Since they have the qualification to complete the jobs, a company could hire more minimum wage workers for less than what they would pay someone in a higher pay grade. That way they can get the work done faster at a cheaper rate, therefore increasing productivity. (Fitzpatrick, 2009) Increased productivity could mean more business, which means more money. When a company increases productivity and makes more money, it can create more jobs. This would be good for the economy because increased productivity means an increase in Gross Domestic Product (GDP). Goods produced by the country could mean more money for the country, which helps to fund education, provides healthcare and other benefits. This would also get other countries interested in investing in their stocks. (BEA, 2007) 2- Less people depend on government aid.
Employment plays an important role in the economy since the more jobs available, the more people work and the more money earned. The less money the government spends on helping families and individuals, the more money they will have to lower the budget deficit. More money means more spending and more spending means more money for the economy. People who depend on government aid are able to work because of minimum wage, and are able to provide for themselves and their families. When it comes to the circular flow, if an individual makes an earns a wage that is above market, it will result with another individual earning a lower income. (Krugman & Wells, 2009, pg. 368-369) The money that the government saves from not having to provide aid for those individuals and families will help to decrease the budget deficit. The government would do less borrowing from organizations and other countries. With less money going out in government aid, there would be little or no need to raise taxes in order to lower the budget deficit, which means there would be more money for consumers to spend. (Krugman & Wells, 2009) 3- Motivates individuals to set career goals.
Human capital, which is education and knowledge, could help to increase productivity in the workplace. This would help workers to work more efficiently to get the job done because they would be more educated and more knowledgeable about the tasks that need to get completed. Minimum wage provides the jobs that would provide the foundation to kick-start a career. It provides the necessary skills that would help individuals to acquire better paying jobs. Improved skills and knowledge means more output and better quality work. After working for minimum wage salaries, young people and individuals might want to improve their education in order to gain the knowledge required to apply for better paying jobs. They would help to improve the economy by using up human capital to work more efficiently in order to be more productive. (Sauter, 2012)
No matter how we may look at the minimum wage issue, many families depend on the minimum wage in order to support their families. Minimum wage provides the foundation which is needed to get your foot into the door, and get individuals in a position which will qualify them for better paying jobs, resulting in them being able to provide for their families in many better ways. Minimum wage helps these individuals to play their part in helping the economy, as they would be able to depend less on government for help, they would sharpen their working skills in order to qualify for better paying jobs in the future, giving the people more money to spend and at the same time, become more educated in order to work more efficiently.