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The process of setting a minimum wage on a state and country-level is important in order to assess the cost of living in a particular area. While the federal minimum wage is a highly significant number, state minimum wages should be taken into account as identifiers for the quality of life in different states. For example, many conclusions can be drawn if a state has a high minimum wage. This paper aims to explore the minimum wage in the state of California as well as the significance of independent minimum wages for separate states and the conditions of workers in outsourced companies.
According to the most recent data, the federal minimum wage in the US equals $7.25 (National Conference of State Legislatures, 2017). The minimum wage in the state of California is higher, amounting to $10 or $10.50 (National Conference of State Legislatures, 2017). It is an important distinction because it signifies that the cost of living in California differs from the possible cost of living in other states. According to Boeri (2012), minimum wages respond to changing economic conditions of the territories.
Therefore, it is safe to assume that setting different minimum wages for states has a great significance for the country’s economic situation. While in some states minimum wage workers can afford to live on the federal minimum wage, the prices and demands of other states may put such employees in a difficult situation. The process of establishing if the minimum wage should be higher than the federal one relies on the cost of living formula (Boeri, 2012).
Thus, it supports the idea of different minimum wages because the difference in prices and costs in various states is evident. Moreover, according to Boeri (2012), the government of the US sets minimal wages without a collective agreement, which leads to it being lower than collectively bargained minimum wages. Therefore, allowing the states to oversee their independent wages encourages more people to engage in the process. The United States should allow the states to have different minimum wages that correspond to the citizens’ needs.
If an organization decides to broaden its reach or relocate its manufacturing plants to another country, the question of wages becomes rather topical. Outsourcing to a developing nation is often seen as a way to lower the expenses of a company. Thus, many owners would want to scale back on every possible spending. That approach usually involves lowering wages for employees who are paid less than their counterparts in developed countries. Such cost-cutting often leads to companies hiring unskilled staff, which in turn may result in lower productivity and overall quality of the final products and services.
According to Wolfson and Belman (2004), small increases in minimum wages affect the rate of employment insignificantly. Thus, by providing workers in developing countries with federal minimum wages from the US may encourage them to work more efficiently and create high-quality products.
The federal minimum wage in the US should be considered as a guide to other states in order to determine their level of living. State minimum wages represent the living conditions of its residents and allow the citizens to pay for basic living necessities. Although outsourcing is an established way of saving money for many companies, employers should consider investing in their employees rather than providing them with the smallest pay possible. All in all, while the federal minimum wage should not be enforced in these conditions, it should be taken into account.
References
Boeri, T. (2012). Setting the minimum wage. Labour Economics, 19(3), 281-290.
National Conference of State Legislatures. (2017). State minimum wages. Web.
Wolfson, P., & Belman, D. (2004). The minimum wage: Consequences for prices and quantities in low-wage labor markets. Journal of Business & Economic Statistics, 22(3), 296-311.
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