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The Effects of Major Companies Paying Low Wages

he present essay has discussed the effects of big corporations paying low wages.

Prime corporations unlike what many people believe, are responsible for paying their workers low wages. A study conducted by the National Employment Law Project has revealed that more than two-thirds of all the low wage earners in the United States are employed by firms that have more than 100 workers (Gunawan&Amalia, 2015). In the present economy, some employers have realized that workers are willing to be recruited not only for less salaries and benefits if any, because of the unattractive economy. The present essay has discussed the effects of big corporations paying low wages.

Paying low wages to workers can have harmful effects on the macro and micro-economic environment. Ideally, when workers are paid lowly, they may not be able to afford many products apart from basic supplements (Gunawan&Amalia, 2015). As a result, some small and medium-sized corporations that offer services may incur losses caused by decreased sales. Furthermore, companies that offer premium goods and services may be forced to survive by adding the cost of their services to those that can afford them, as they will be locked out of the lowly paid workers. Therefore, it means that the effects of paying workers lowly are two-pronged- pricing up the better paid employees while pricing out the lowly paid ones.

Low wages also demoralize workers who are directly responsible for economic growth. When the morale of workers is lowered, they will tend to be less productive, leading to a situation where by most firms become unable to execute optimal production(Lucas, 2018). Moreover, low wages reduce the amount of taxes collected by the government, because, the lower the wages paid to employees, the lower the amount of taxes they pay. Therefore, this depicts that the economic growth of a nation can be directly related to the level of pay its workers receive both from the government and private companies.

The most worrying statistic of paying workers lowly, especially in the U.S is the strain they undergo to access Medicare. In most cases, lowest paid workers use their wages to pay medical expenses since they cannot afford Medicare insurance (Tarr, 2017). Hence, it becomes difficult for employees to improve their living standards when they have to individually fund every cost. Unlike other countries, America has a weak social system with the government not actively involved in the welfare of its citizens. A worker, who is unfortunately afflicted by a medical problem in the U.S is more likely to die than their counterparts in other countries like Sweden. Such is because the burden of paying for medical services is not government driven except for some special cases like imprisoned citizens.

Giving employees meager wages may also result into constant job changes. When employees are paid less than the minimum wages, they may tend to constantly look for better employers with better packages besides salaries (Gunawan&Amalia, 2015). Furthermore, when big companies decide to pay minimum wages to minimize staffing costs, they may expose themselves to job changes and the adverse effects that result from constant hiring. For example, as the employees leave, companies are forced to advertise for the posts, conduct interviews and train new employees to feel the vacancies which may be expensive.

Conclusion

Paying workers low wages has adverse effects to both companies and employees. Lowly paid employees are prone to job changes which may make the firm to incur costs of hiring and rehiring. Low wages also lower the morale of workers making them less productive. In the U.S, lowly paid employees may not be able to afford medical insurance. Finally, low wages reduces the workers’ purchasing powers, making them unable to afford other products apart from basic commodities. Therefore, corporations should avoid underpaying their employees to prevent such negative impacts.

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