Inequality is on the rise due to CEOs earning 183 times more than a typical UK worker (Settle, 2015). A maximum wage is a legal limit on the income an individual can earn. It is of relevance due to the rising inequality caused by salaries significantly higher than the minimum wage being paid (Simms, 2003). This essay will consider the advantages and disadvantages of a maximum wage policy and suggest why one should be introduced. A major reason for the maximum wage is its ability to reduce inequality. Shaheen (2011) explains how wage gaps are one of the primary reasons for inequality. She reasons that inequality results in societal problems such as higher crime and poorer public health. She adds that inequality encourages borrowing which leads to over-consumption and unsustainability. Having a maximum wage would limit the extent of inequality, help confine these economic problems and ‘help ensure decent living standards for all’. In addition, Simms (2013) proposes that ‘inequality leads to instability’ and suggests that a maximum wage accompanying the existing minimum wage can …show more content…
People work to get paid and gain greater economic utility. However, limiting the amount earned would limit the utility gained and hence the willingness to work. Thus, a maximum wage restricts the contributions to society and causes the economic output to fall below its optimal. Additionally, emigration to countries without the policy would be encouraged and this will result in a shortage of skilled labourers. Nevertheless, academic evidence indicates that wages above $80,000 cause a marginal increase in wellbeing (Shaheen, 2011). Moreover, Simms (2013) argues that earning over $1 million was notably higher than the minimum wage and sufficient for an individual. This shows that the disincentive caused by an adequate maximum wage is negligible and can be
Going back to 1978, the typical male worker was making around 48,000 dollars per year while the average person in the wealthy group of the 1 percent earned 390,000 dollars per year. By 2010, the typical male worker earned less than in 1978 whereas the person in the top 1 percent earned more than twice as much as before. Today in America, 400 people have more wealth than half the population of the United States. Reich explains that a strong middle class is what gives our economy stability. This leads to the fact, that 70 percent of the economy is based on the consumer. If the middle class’ wages declin...
While the inequality between wages and income are often frowned upon by modern middle-class and lower-class societies, the gap between the wealthy and poor often proves beneficial. Because the difference in income levels between these two classes of society are steadily increasing, the incentives of the less wealthy are increasing as a result. An incentive is any factor (financial or non-financial) that enables or motivates a particular course of action. The impact of this increasing gap has created a higher demand for education, produced a competition among people to...
Understanding the basic concept of minimum wage is important for every single individual. We all live in this world together, and it is obvious that there is an order. In order to continue our lives and afford our basic needs, we all need to work and gain wealth. As the old adage says ‘‘There ain’t such a thing as a free lunch. ’’
An employer who pays his employees the bare minimum will not see the same appreciation and respect as an employer who pays his employees livable wages. Lew Prince points out the various benefits that have come with paying his workers above the federal minimum since his business began. He states, “We’ve outlasted 20-store local chain and numerous regional and national chains. Most of these companies paid their employees minimum wage or barely above. My creative, dedicated, and better-paid employees won this life-or-death struggle for us” (Prince). Their loyalty also benefits Prince in the fact that he has to pay very little for employee turnover and constant training costs that other businesses struggle with. What Prince and many other business owners alike gain from higher wages reflects only a portion of the nation that will prosper from this monumental economical
Many people against raising the minimum wage create arguments such as, “it will cause inflation”, or, “ it will result in job loss.” Not only are these arguments terribly untrue, they also cause a sense of panic towards the majority working-class. Since 1938, the federal minimum wage has been increased 22 times. For more than 75 years, real GDP per capita has consistently increased, even when the wage has been
In an editorial written by Warren Buffett for the Wall Street Journal, according to S. Kumar in his article “America’s Workers Have Bigger Problems than the Minimum Wage” for Fortune Magazine, the problems that American workers face are far more than just attaining a livable wage. The three biggest problems that Americans face include the growing power of corporations, competition against technologies, and the growing income inequality that requires specialized skills where low-wage workers may not have education or capabilities to adapt. However, the minimum wage is still a serious problem, according to Roger Lowenstein. Lowenstein writes that the minimum wage does not provide a livable wage, which is a real problem when families are trying to survive on income that is too low even for an
Although the livable wage has a good intention of decreasing poverty, it is not consistent with the American spirit of capitalism because the livable wage promotes an economy that does not support business. America has always been a business friendly country. America is a business friendly country because of the American belief in a hands-off approach to commerce and the economy. This is called “laissez-faire” economics; the system allows American companies to make decisions that are best for the firm which in turn increases wealth throughout society because it makes an incentive to increase productivity. It also turns out that this system of capitalistic economics is the most efficient at allocating scarce resources. For example, the opposite of capitalism, a command economy, failed in the Soviet Union. The Soviet Union’s economy failed because it tried to allocate resources through central planning, instead of having businesses determine how much of a product to produce. Our system of limited government interference in business has allowed American society to become the wealthiest societies in the world. The lack of government intervention income has become ingrained with t...
The debate on the federal minimum wage is an ongoing issue. Both supporters and opponents to the minimum wage have valid arguments and multiple studies to defend their rationale. However, these studies and statistical reports may be concent...
Notes • (Source #1) After the civil war and the 13-15 amendment were passed women believed their suffrage would become more relevant, but it didn’t. • (Source #1) The women’s movement stayed in a start-stop cycle due to internal conflicts in the movement. • (Source #1) “Adequate attention to the different experiences of ethnic minorities, rural and western women, and lesbians (among others) becomes problematic within the terse format of Women's Rights.” • (Source #2) Wage gap depends upon gender along with race.
The wage gap is a major issue that is constantly brought up in the work place. Numerous people use the term “wage gap” to state how gender can affect somebody 's income. There has always been an understanding that men typically made more money than women. For a long time, women were not allowed to work; therefore men were in charge of “bringing home the bacon”. However, times have changed and there are various situations where a household is centered off a women’s’ income. Females can become single mothers who have a responsibility to care for a child(s). Responsibilities can include monthly payments of water and electric bills and even weekly payments towards groceries. Women have to acquire enough money so that they are able
Women are more than half the work force and are graduating at higher rates then men and continue to earn considerably less then men. There are several contributing factors to the gender wage gap. Women experience gender discrimination in the work force even though it’s been illegal since the Equal Pay Act in 1963. One of the challenges for women is uncovering discrimination. There is a lack of transparency in earnings because employees are either contractually prohibited or it’s strongly discouraged from being discussed. Discrimination also occurs in the restricting of women’s access to jobs with the highest commission payments, or access to lucrative clients.
About “75.3 million people ages sixteen and over worked for hourly wages in 2008, according to the U.S. Department of Labor’s Bureau of Labor Statistics” (“Minimum Wage”). Meaning almost a quarter of the workforce in this nation are working a minimum wage job. Numerous people believe that these workers are not able to make ends meet, and increasing the minimum wage will help these individuals substantially. Even though people believe that increasing the minimum wage will benefit the society, they tend to overlook the drawbacks of increasing the minimum wage, and how it will prove to be detrimental to the society. People believe that increasing the minimum wage will reduce poverty and improve the living standards of the individuals.
Income inequality continues to increase in today’s world, especially in the United States. Income inequality means the unequal distribution between individuals’ assets, wealth, or income. In the Twilight of the Elites, Christopher Hayes, a liberal journalist, states the inequality gap between the rich and the poor are increasing widening, and there need to have things done - tax the rich, provide better education - in order to shortening the inequality gap. America is a meritocratic country, which means that everybody has equal opportunity to be successful regardless of their class privileges or wealth. However, equality of opportunity does not equal equality of outcomes. People are having more opportunities to find a better job, but their incomes are a lot less compared to the top ten percent rich people. In this way, the poor people will never climb up the ladder to high status and become millionaires. Therefore, the government needs to increase all the tax rates on rich people in order to reduce income inequality.
Evaluate the view that wage differentials are only a reflection of differences in the marginal productivity of workers.
To understand the concept of social inequality, one needs to explore how it occurs or functions. According to Charles Walker, “Social inequality refers to the ways in which socially-defined categories of persons are differentially positioned with regard to access to a variety of social ‘goods”. Social inequality, therefore, is an umbrella term. It is expansive in nature, as social inequality encompasses a variety of different inequalities; for example, gender, race, and structural inequality are all social inequalities, but they can differ widely in manifestation. The definition of social inequality can also change based on the perception of the individual who is defining the term.