Essay Example: The Effects of Major Corporations Paying Low Wages

People join the workforce with hopes of advancing their careers and earning a decent living. Most of them offer labor to provide for their families and live comfortably. The pay rate varies across firms, which is influenced by several factors. Workers receive wages in the form of salaries, pensions, and bonuses every month (DePillis). Wage rates are the money that employees earn per unit of labor and depend on an individual's experience, country, and expertise. The wage rate increases when the workforce exceeds the needed supply, but some corporations ignore this factor. Most major companies pay workers low wages to increase profitability, despite making earning good revenues. Paying employees, a minimum wage is both advantageous and disadvantageous to a corporation. Minimum wages refer to the least amount of monetary compensation that employees are entitled to for a day's work, weekly or monthly. Thus, it is the amount that employers are mandated by law to pay workers for work done. This paper explores the positive and negative effects of paying low wages by significant corporations.

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In some instances, paying low wages can have a positive impact on employees. Some significant corporations pay the minimum wage because they use some of the money to train employees, improve the workplace, and create more opportunities (Naidu). In such cases, employees benefit from low wages because they acquire meaningful skills that advance their careers and increase their worth in the job market. Moreover, new entrants are paid minimum wage because they lack the experience and expertise owned by seasoned employees. Hence, some major corporations pay the minimum wage to equip employees with skills and knowledge.

Paying low wages by significant corporations can harm the micro and macro-economic environment. It is not only workers who are underpaid that suffer, but also firms that deal with service provisions are left out, and people cannot access them (Jersin). Moreover, low wages given to employees hinder economic growth because the purchasing power is diminishing. For example, Walmart can be used to show the importance of increasing the minimum wage. The firm has over 2 million employees and 1.4 million hourly workers and generates over $17 billion annually. The company attributed its growth to paying employees well, which increases productivity and sales. Because people only have money for essential items, they cannot buy other things such as clothes or property, which promotes economic growth. Furthermore, low wages harm Medicare. Underpaid workers cannot afford Medicare insurance and use the little money they get to pay for medical expenses.

Major corporations that pay low wages lower the morale of workers and slow down productivity. Employees work hard to deliver and please employers who reward them for good work. Low wages demotivate workers and cause them to perform poorly, instead of improving. Production levels suffer when the morale of workers is limited, which may cause a total collapse (Hellebrandt). Furthermore, the government also suffers when workers receive a minimum wage because they cannot impose high taxes. Hence, the economic growth of a nation linking to the level of pay workers receive. For example, employees who receive high remuneration are more likely to buy property, or go to restaurants and spend money (Ghilarducci). On the other hand, workers who are compensated poorly can only afford basic commodities. Also, low wages hinder growth because people lack the drive to learn new skills.

Workers provide labor in exchange for monetary compensation. However, most of them receive minimum wages that cannot sustain them. The effects of major corporations paying low wages include lowering the morale of workers, stagnating economic growth, and low productivity. Furthermore, low wages hinder personal growth and constant changes in jobs. Increasing the wages of workers will enable them to support their families and reduce reliance on government social support systems.

Work Cited

DePillis Lydia, Big Companies, used to Pay Big Wages, Not Anymore, CNN Business. 2018

https://money.cnn.com/2018/01/18/news/economy/big-companies-wages/index.htmlGhilarducci Teresa, How Big Firms keep Wages Low, Forbes. 2019

https://www.forbes.com/sites/teresaghilarducci/2019/01/21/uncovering-the-mystery-of-your-sluggish-paycheck/#340ec9e91d79Hellebrandt Tomas, Effects of Large Corporations Raising the Wages of Low-Paid Workers. Peterson Institute for International Economics, 2015

https://www.piie.com/blogs/realtime-economic-issues-watch/effect-large-corporations-raising-wages-low-paid-workersJersin Josh, Why Aren’t Wages Keeping Up? It’s not the Economy, it’s the Management. Forbes, 2018.

https://www.forbes.com/sites/joshbersin/2018/10/31/why-arent-wages-keeping-up-its-not-the-economy-its-management/#44a68474397eNaidu Suresh, More and More Companies, have Monopoly over Workers’ Wages: That is killing the Economy, 2018.

https://www.vox.com/the-big-idea/2018/4/6/17204808/wages-employers-workers-monopsony-growth-stagnation-inequality