Extended Argumentative Essay


Should Minimum Wage be Abolished?


In my opinion, minimum wage must not be abolished. The least amount of money must be paid to workers as permitted by the law. Every worker is entitled to a minimum pay by the employer. Minimum wage is a basic amount that is required by an employee to meet his basic requirements. It is recognizable under human rights and every person must have the right to a decent amount of wage that suffices his family. Minimum wages provides a sense of security in people from being exploited. The employee turnover is also reduced. The minimum wage to be paid must be depending on the skills required for doing a particular job. An increase in minimum wage increases the purchasing power of the employee.

According to Neumark and Wascher (2008), minimum wage is the lowest amount of money that is allowed by federal and state laws. It is an artificial wage that is imposed by the government to make sure workers are paid that a certain amount. Minimum wage helps in reducing poverty. The income of labors increases giving them a better life than before. People have a tendency to work at places that offers better wage. Minimum wage acts as incentive for people who are unemployed for various reasons. The low wage workers considered positive effects due to minimum wage implementation. They were motivated to look for a better job. It is beneficial for people having single parents. It also boosts up the morale of the employees who feel that they are paid unfair wage (Nguyen, 2013). The concept of minimum wage was adopted by many countries mainly for boosting up morale of working class. An abolition of minimum wage would create low income jobs that would be adverse for the company’s economy. The overall advantages experienced by minimum wage is reduction in poverty levels, decrease in government expenditure, increase in productivity, increase in efficiency and increase in incentives.

It is argued that with introduction of minimum wage in UK, there was a counterbalance of effect on monopsony employers. The productivity of workers was increased. It reduced the poverty rate in UK and investors increased the labor productivity. The turnover rate of employees fell down thereby increasing efficiency (Stewart, 2004). According to Schulten (2014), as per European minimum wage policy implementation, there was a demand boost for growth and employment. Large amount of workers benefitted in Germany and Lithuania which improved the living and working conditions. In Japan, too many women live in poverty. An increase in the minimum wage would boost their morale. They have families to look after and an increase in the minimum wage would help in closing the wage gap. The economy would be strengthened as the workers would get a higher earning thereby increasing the purchasing power. Various benefits were seen like female employees were retained and their loyalty towards the company increased (KAWAGUCHI and YAMADA, 2007). Minimum wages in Malaysia made higher contributions to Employees Provident Fund thereby increasing retirement advantages to them. The workers could pay off their debts without going to bankruptcy. It decreased government spending by providing aids to workers by their employers. The social spending was cut down and the money was utilized for investment. The production level especially at the rubber companies were boosted due to increase in productivity. Before the implementation of this act, the government was deducting from wages of workers in order to recover from expenses they were making. Minimum wage provided several benefits to them like increase in efficiency and productivity (Leu Fong Yuen, 2013).

Contrarily, the arguments that lead to abolishment of minimum wages are unemployment, inflation and increased cost of investment. According to M??rginean and Chenic, (2013), each time with a raise in minimum wage, it is harder for people to get jobs. The employers do not have time to train a person that majorly affects the poor people and youth. Minimum wages was implemented for complying with basic human rights that is not exactly followed. The small businesses take undue advantage of this policy. There are different groups of workforce and teen unemployment is consistent with increase in minimum wage. The cost of workers increases and the therefore the cost of goods or services increases. The value of money comes down and the cycle is repeated. The society is corrupt which does not let the society flourish. Minimum wages create unease in the society and remote areas suffer with it. There is a disparity created in the working cultures. The unskilled labors are paid the same virtually as a skilled labor which creates no difference in the employees. The workers lose a sense of earning and stop putting efforts in the employment ladder. It creates a disadvantage among people as they take the money for granted and do not intend to work any harder. The smaller businesses either go out of business or cut the working hours (Benassi, 2011).

According to Foguel, Ramos and Carneiro (2001), minimum wage increases drive in small businesses. The small business firms employ resources at maximum efficiency and labor costs are fully absorbed. The demand is inelastic for many industries and due to heavy capital investment; firms might have to exit the market. With a higher minimum wage, there were adverse effects on American Samoa Location. The cost of power increased but low cash flow, poor management and insufficient advertising led to problems due to minimum wage implementation (Flynn, 2003). In London, it was observed that very few people benefitted from minimum wage. The skilled workers deserved more than the unskilled workers. Minimum wages also leads to cost-push inflation because of which the costs has to be borne by consumers. The household who has a single income earner are relatively poorer. According to Waltman, (2008), The tax burden on people increases as there is increase in earnings. The negative effects are mainly seen on the employment for which the demand of work is contracted and unemployment increases. It is argued that inflation creates a pressure on the business environment by passing high cost to the companies. The short term demand for labor trends accounts to increase in salary. There are high rates of unemployment and higher prices due to fall of contractual works. The labor market got flexible in UK due to changes in rest of the economy. The British competitiveness suffered low wages and foreign investors watched a high salary to avoid economies (Wadsworth, 2010). The poorest don’t benefit with minimum wages and a black market is created by people who take undue advantage out of minimum wage. The poorest people have to rely on the benefits and are not affected by minimum wages.

Minimum wage abolishment would account to having several advantages as well as disadvantages. With a human right perspective, it is ethical to have a minimum wage in economy. It strengthens and boosts the morale of the employees along with increase in productivity and efficiency. Contrarily, minimum wage turns an economic crisis over a country by negative effects like unemployment and inflation. The minimum wage was introduced with a positive perspective on the economy and well being of people, but it is not effectively applied by the companies. People take undue advantage of minimum wage thereby creating a dilemma on the abolishment of policy. There are several arguments given by economists representing the positive effects and ill effects of minimum wage policy. In my opinion, the minimum wage must not be abolished as it gives a weightage to human rights and flourishes the economy.


Benassi, C. (2015). The Implementation of Minimum Wage: Challenges and Creative Solutions. [online] Available at: [Accessed 31 Jul. 2015].

Flynn, N. (2003). Economic report. [Washington, D.C.]: U.S. Dept. of Labor, Employment Standards Administration, Wage and Hour Division.

Foguel, M., Ramos, L. and Carneiro, F. (2001). The Impacts Of The Minimum Wage On The Labor Market, Poverty And Fiscal Budget In Brazil. [online] Available at: [Accessed 31 Jul. 2015].

KAWAGUCHI, D. and YAMADA, K. (2007). The impact of the minimum wage on female employment in japan. Contemporary Economic Policy, 25(1), pp.107-118.

Leu Fong Yuen, J. (2013). Minimum Wage Policy in Malaysia: Its Impact and the Readiness of Firms. [online] 28, p.21. Available at:

M??rginean, S. and Chenic, A. (2013). Effects of Raising Minimum Wage: Theory, Evidence and Future Challenges. Procedia Economics and Finance, 6, pp.96-102.

Neumark, D. and Wascher, W. (2008). Minimum wages. Cambridge, Mass.: MIT Press.

Nguyen, C. (2013). The impact of minimum wages on employment of low-wage workers. Econ Transit, 21(3), pp.583-615.

Schulten, T. (2014). Contours of a European minimum wage policy. Berlin: Friedrich-Ebert-Stiftung, Dep. for Central and Eastern Europe.

Stewart, M. (2004). The Impact of the Introduction of the U.K. Minimum Wage on the Employment Probabilities of Low-Wage Workers. Journal of the European Economic Association, 2(1), pp.67-97.

Wadsworth, J. (2010). Did the National Minimum Wage Affect UK Prices?. Fiscal Studies, 31(1), pp.81-120.

Waltman, J. (2008). Minimum wage policy in Great Britain and the United States. New York, NY: Algora Pub.

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