What is the lowest wage a company should be able to pay someone? This is not an easy question to answer. Higher wages might help workers but hurt companies, while low wages will hurt those workers but help the businesses. Should we have a minimum wage, and if so, what should that minimum wage be? This episode of Thinking in English will look at the history of minimum wages, and then investigate a few arguments for and against higher minimum wages!
Legally (adv) – as stated by the law
Children under 16 are not legally allowed to buy cigarettes in the UK
Poverty (n) – the condition of being extremely poor
Two million people in that city live in poverty
Entitle (v) – to give someone the right to do or have something
Being unemployed entitles you to government support
To spur (v) – to encourage an activity or development or make it happen faster
A huge new factory spurred economic growth in the entire region
Necessity (n) – something that you need, especially in order to live
Eating is a biological necessity
Devastating (adj) – causing a lot of damage or destruction
The missile strike was devastating – the target was totally destroyed
Market (n) – the business or activity of buying and selling a particular product or service
Many companies are waiting to enter the Chinese market!
To exploit (v) – to use someone or something unfairly for your own advantage
Laws exist to stop companies exploiting their employees
Over the last few weeks, many of the news publications I regularly read and watch have been focusing on the debate over minimum wages. This debate has been in the news recently because there have been attempts to raise the national minimum wage of the USA. While some people argue that raising the minimum wage will be harmful to small businesses, many others believe that workers deserve more money for their work. This debate is not just a debate in the USA, but all over the world. How much money should you be paid for your work? And what is the lowest amount anyone should be paid?
What is a minimum wage? In a nutshell, the minimum wage is the lowest amount of money a person is legally able to be paid. They are designed to make sure that employees earn enough money to support their basic needs such as food and accommodation. Before minimum wages, working people were commonly paid extremely low wages which left many living in poverty and struggling to survive. The first minimum wages were introduced in New Zealand and Australia over 120 years ago in the 1890s. At this time, wages had to be enough for a man, his wife, and two children to “live in frugal comfort.” At the beginning of the twentieth century this debate was one of the major political topics in the United Kingdom. At that time, the UK probably had the world’s most developed industrial economy with hundreds of thousands working in low paid and dangerous labouring jobs. In the USA, Massachusetts was the first state to introduce a state-wide minimum wage in 1912, with President Franklin D Roosevelt including a national minimum wage as part of his reforms in the 1930s.
By the end of the 20th century most countries have introduced some kind of minimum wage or collective bargaining agreement. Collective bargaining agreements are not national laws, but agreements between workers organisations and companies to set minimum wages! Minimum wages are normally not the same all over an entire country, or an entire population. For instance, it might be different depending on the city you live in or your age. The Swiss city of Geneva currently has the world’s highest minimum wage of 23 Swiss Francs an hour (about $25). If you remember from an earlier episode of Thinking in English, Geneva is one of the most expensive cities to live in! My country, the UK, has a range of minimum wages varying from £4.50 for people under 18, to £8.72 for people 25 or older.
In the USA, however, the national minimum wage is only $7.25 an hour (almost half that of the UK) while some employees such as restaurant staff are not entitled to the minimum wage! Although there are higher minimum wages in certain states, many US states follow the national level. Over the last few years, there have been more and more calls for this to be increased to $15 an hour.
The rest of this podcast will look at some of the key arguments for and against increasing minimum wages! Like previous debate episodes, I want you to try to think in English. Listen to the two sides of the argument I present, and then decide what you agree with! Thinking is such an important skill for language learners to develop!
One of the key arguments made by opponents to higher minimum wages is that increasing the minimum wage would force businesses to fire employees and thus raise unemployment levels. As wages would be higher, it will cost more for businesses to keep low wage employees! In fact, the United States Congressional Budget Office has projected that a minimum wage increase from $7.25 to $10.10 would result in a loss of 500,000 jobs. On the other hand, economists Doucouliagos and Stanley reviewed 64 different minimum wage studies found “little or no evidence of a negative association between minimum wages and employment.” Basically, in all of the studies they reviewed, minimum wages don’t seem to negatively affect jobs!
Moreover, raising the minimum wage might actually help to spur economic growth. If people have higher wages, they will have more money to spend! And our modern economies need people to spend their money! Perhaps increasing the minimum wage would also reduce poverty. According to a 2014 Congressional Budget Office report, increasing the minimum wage to $9 would lift 300,000 people out of poverty, and an increase to $10.10 would lift 900,000 people out of poverty. I’m sure you agree, that is a lot of people!
Furthermore, the current US minimum wage is not high enough to allow people to afford everyday essentials. According to a 2013 poll by Oxfam America, 66% of US workers earning less than $10 an hour report that they “just meet” or “don’t even have enough to meet” their basic living expenses, and 50% say that they are frequently worried about affording basic necessities such as food. A 2015 report by the Alliance for a Just Society, found that an American worker supporting only himself on the minimum wage would have to work 93 hours a week in order to survive. In California in 2015, even a person earning the then state minimum wage of $9 per hour would need to work 92 hours a week to afford to rent a one-bedroom apartment.
However, there are some economists who argue the opposite! If the minimum wage was to increase, there are concerns that employees work hours would decrease and the price of food and accommodation could increase. Most low wage workers are employed in retail and food industries. If restaurants, coffee shops, supermarkets, and other stores have to pay far higher wages, the cost of their products may also increase. If you remember earlier I mentioned Geneva has the highest minimum wage in the world. But Geneva is also one of the most expensive cities in the world.
Young people may also find it harder to get jobs if wages were higher. In western countries, 16-24 year olds make up around half of all minimum wage earners.Economic professor Matthew Rousu, wrote in a 2014 article that minimum wage raises will “have a devastating impact on teenagers” because companies will not want to pay many young workers with no skills or experience minimum wage.
One strong argument against minimum wages is that the free market should determine wages, not the government. For many years, some economists, politicians and business owners have argued that the market should decide wages. The idea is that, like the price of goods, the price of a person’s labour will be reflected in the market. The American Enterprise Institute has stated that minimum wages are not based on economics, but on political decisions, and that they don’t reflect the industry and geographic variations of jobs!
However, this perspective is less and less popular recently. Prices have been increasing faster than wages,and companies continue to exploit their employees. Many people around the world recognise that current minimum wages are often not fair – they benefit the business owners not workers. In fact, the majority of Americans, including conservative Americans, believe the minimum wage should be increased!
Should we have minimum wages? And should existing minimum wages be increased?
Supporters of higher minimum wages believe that the current minimum wages are often too low for anyone to live on; that a higher minimum wage will help create jobs and grow the economy; and that a majority of people, including a slim majority of self-described conservatives, support increasing the minimum wage.
Opponents say that many businesses cannot afford to pay their workers more, and will be forced to close, lay off workers, or reduce hiring; that increases have been shown to make it more difficult for low-skilled workers with little or no work experience to find jobs; and that raising the minimum wage at the national level does not take into account regional variations!
What do you think? What is your country’s minimum wage? Should it be increased?
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