The Impact of Raising the Federal Minimum Wage on a Firm

The federal minimum wage was created with the aim of protecting workers from the profits edge management organization exploitation. It is based on the average salary salaries that are earned by individuals. The impact of this has been many employers employing few individuals to cut the costs of paying a lot in salaries.

Raising the minimum wages could mean that employers will now look on to hiring fewer and more specialized employees to maintain their productions at the desired costs.  This would in turn lead to more unemployment than currently experienced as many workers would be retrenched.

Another impact would be raised costs of goods and services as the manufactures will pass on the costs they bear to the consumers. This condition could even be worse since many will be losing jobs and, therefore, won’t be able to afford the goods at the new prices.

The companies could as well decide to reduce their spending on the raw materials required in the production. This will jeopardize the quality and quantity of the goods produced that are leading to lower standard. The amount spent on other services such as research and education trust funding could also be diverted to cope with the new situation.

The wholesalers will also be forced to cut their costs, in other ways to avoid loses holding onto the merchandised. Some processes could be eliminated or reduced such as retailing. The producers and wholesalers could prefer to sell their goods directly to the customers rather than having a third party.

Companies will prefer cheaper shipping methods to cut the costs so as to compensate for the lost income. In return, the revenue that the shipping industry gives to the market will reduce leading to a shake in the economy.

Raising the minimum wage may sound good, but it has various negative effects on the individuals as it influences the decisions made, affects the low skilled workers and the entire supply chain. The company will always try its very best to remain at the top with looming business. To cater for this, many have to surfer for the changes.

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