Low Wage Employment

Low-wage workers is a familiar term as it refers to a group of people who are always on the news. With the mention of that phrase come the legislative body congress and its failure to pass tax credits that would be beneficial to low-wage workers families. But the questions one should ask are who these low-wage workers are. There is a need to understand their characteristics, stories, hopes, and dreams. At this point, one can get a clearer picture of the reasons behind their unsecured financial situations, evident exploitation and what the legislature does to protect them. This paper seeks to analyze the reasons why workers are being paid low wages as well as the problems and barriers low-wage workers face.

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Economists, social critics, and policymakers have for years debated on relevant issues affecting the lives of people. In labor economics, the most common debate is the minimum wage that one should get. Arguments on the minimum wage put into consideration wages, distribution of income as well as employment. Economists argue that minimum wage indeed has a positive effect on employment. Additionally, the minimum wage can also impact on employment negatively. From observation in markets where the employer gets a considerable market power in that he can control wages, there are chances that the legal imposition of a minimum wage increases levels of employment. The employer at this point practices monophony power whereby he can pay wages that are far much below the marginal productivity of the worker (Bigler 48). In a scenario where the authority increases the minimum wage, the employer remains with the incentive to keep the employee as the wage is still not above productivity. In essence, the higher wage results in the supply of labor by workers who were previously idle. It is, therefore, to assert that the effect that low-wage has on workers and their families is a critical issue.

Low- wage also termed as minimum wage refers to the lowest level of pay for employees as set by government legislation (Bigler 48). Equivalently, it is the remuneration below which workers may refuse to sell their skill and labor. The arguments surrounding this term are two namely; fiscal and social. The supply side views minimum wage as a burden placed on small business ventures while the demand side denotes that when wages are too low, the result is an increase in the levels of poverty.

Despite job losses evidenced by increases in minimum wage within given periods, policymakers have continued to raise minimum wage more frequently in recent years. Since 2009 when the federal government raised minimum pay, 23 states have followed suit. The increase in minimum wage could have many implications for workers, employers, and the employment sector.

Low-Wage Workers

There is over 6 million working poor in the US. This number constitutes not less than 5% of all laborers in the working force (Bigler 48). In most instances, most of the low-wage workers are black and Hispanic people who are mostly women. This group falls under the age bracket of between teenage and the youth (Bigler 48). The observation is that most low-wage workers are females from minority groups. Most of these workers get employment in the service industry of the labor economy. Not surprisingly, most of these employees are high school dropouts with low education. Many low-wage employees are recipients of welfare.

Low-wage workers fall among the contingent and non-standard workforce. These are members in the labor economy who are not involved in traditional full-time jobs. They include such workers as temps, part-timers, day laborers, independent contractors, and agency employees. In addition to low wages, these workers are at a higher risk of abuse compared to others in the labor sector. Most often, they are not covered by employment laws and at times are classified by employers as independent workers. Greatest risk lies with the day laborers who are mostly young Hispanic men who have recently migrated to the States.

Immigrant workers are also a part of the low-wage workforce, whether documented or not. Most of them lack English proficiency and have low education compared to natives. These barriers hinder them from acquiring appropriate jobs. Most of the immigrants earn less than twice the minimum wage.

Problems of Low-Wage Workers

Low earnings form the largest part of the difficulties that low-wage workers face. About 70% suffer from this problem (Bigler 92). In addition to this situation is the issue of compensation packages. Most low-wage workers endure exemption from benefits. They are also unlikely to have health benefits from their employers. The same applies to paid leave including vacation, personal days, and sick leaves. Compensation does not take place. Disability insurance is also not offered which means that a low-wage worker will face consequences for missing job because of illness not caused by the job.

Low-wage workers hold the lowest-paying and unstable jobs. They are few opportunities offered to them. If they are not in the retail trade, then they are the service sector. In particular, they are in two common occupations; the service occupations and the sales sector. Most of these people fall under 150% poverty. Even in personal services, poverty rates among workers are very high (Bigler 92). Workers who rank highest in the poverty chart are mainly those working in private household service occupations including child care, cleaners, and launderers.

Low-Wage workers lack full-year employment. Compared to other employees, chances of this group working year-round are very slim. They only get to work for an average of two- thirds a year. The reason they do not work the whole year is not a result of laziness but the lack of full-time jobs. They involuntarily work as part timers to earn a living (Bigler 92). This is explained by the type of employment that such workers hold. Most of them are limited to agricultural work and machine operators, jobs that mostly offer seasonal employment.

The lack of higher education is a threatening issue to the lives of low-wage workers in the workforce. Most of them hold less than high school education. The consequence of a lack of proper education is poverty to levels of up to 150%. Employers, on the other hand, are not willing to offer job training. Such combination of inadequate literacy and training makes the low-wage workers lack the competitive edge in the labor market.

Most workers in the low-wage sector of labor have health constraints. People with severe health conditions having no way out of poverty. Those suffering from such conditions are likely to become members of the low-wage workforce. They, therefore, stay longer in poverty and even after they leave poverty, their earnings are quite low. The low-wage workers not only face the problem of getting good and steady employment opportunities, but also, of health situations that are a limitation of them being able to work. Of greater significance, low-wage workers have less access to Medicare. They are less likely to be covered by the employers or union by health insurance. Most of the jobs they hold do not offer such benefits as health insurance.

Most of the low-wage workers families are single female-headed households. Most of the members of these families work but live below the 150% poverty level. Most of the heads of these families have never married while some are divorced, separated or widowed.

The only relief for low-wage laborers is such income supplements as the Earned Income Tax Credit (EITC) and food stamps. EITC applies to low-wage workers with children, while food stamps are for all rated as poor. However, one notes that few of the members of this group receive these benefits. Welfare administrators advise most of them especially men that they do not qualify for such programs. There are also many barriers created by local agencies that hinder and discourage many from welfare participation.

Low-wage work force prevents parents from child development participation. Many parents working in low-income opportunities spend longer, unusual and inflexible hours working. Such a schedule prevents them from participating fully in the care of their children for they lack the time to give attention and adequate care compared to higher income parents. They have to make the hard decision between choosing the family or their income. Absenteeism on the part of the parent affects negatively the emotional health not only of the children but the family at large.

Work-oriented problems faced by low-wage workers are numerous. Criminal records for many of these workers act as a barrier towards finding better employment. They also have records of child abuse and neglect that are created by child welfare programs. Acquisition of occupational licenses is also a barrier which may lead to employment discrimination (DeFina 320). Another problem that this group faces has to do with the illness of either the worker or family member. When they require time away from work to attend to such, they are not compensated for hours or days out of work.

Due to the low remuneration, most of the low-wage workers live in deplorable conditions. They lack affordable housing as low wages do not provide for good shelter. They also lack medical insurance as they cannot afford to remit money on a monthly basis to cover for the same. The group lacks upward mobility in the social ladder as they lack the required skills for employment opportunities.

The government has tried to contain the issue by seeking a remedy that lasts. Its option lies in the increase of minimum wage to up to $15 by 2017 to workers especially in the service sector. However, as it is analyzed below, they have not solved but created more problems for low-wage workers.

In July 2015, the government announced the raise of minimum wage for workers in the fast-food enterprises to $15 per hour over the next years. Several states have complied to this initiative, but all fall below the $10 per hour mark. Economists predict that by the end of 2017, the minimum wage will rise to $15 per hour.

Impact

Small businesses

The federal minimum wage in 1968 was at its peak at $8.54 (current value, 2014). In 2009, it was raised to $7.25 per hour and had a negative impact. The federal minimum has since lost 8.1% purchasing power to inflation. Economists have observed that when the affluence of the US is consided, the expected minimum wage in America should be $12 per hour. With the rise in minimum wage especially in the fast-food restaurant businesses, there is likelihood for prices to go higher. Prices are estimated to rise by at least 4.3%. Also, some ventures will be forced to cut down jobs to allow for more remuneration to employees. The minimum wage has a an effect on small ventures because a significant amount of the earnings of the day go directly to paying off expenses incurred by the business. These expenses include inventory, equipment, mortgage or lease, supplies, benefits and most importantly, employee wages. The largest costs incurred by small businesses are wages and benefits to employees. On the other hand, they are the only costs that can be controlled. When a higher minimum wage is enacted by the legislature, it means that there will be fewer workers hired. The workers must be downsized to comply with minimum wage law. The direct impact thereby is the rise in unemployment rates.

Poverty

Critics on minimum wage conclude that the raising of minimum wage does not curtail poverty levels. There is a low percentage of employees is in full-time earning minimum wage. About 75% of minimum wage earners are considered part-time employees (Gautie and Schmitt 116). They do not, therefore, rely on their income for higher living conditions or even their current standards. The increase in minimum wage thereby w...