Performance-based pay
Labor is a valuable resource required by any organization to grow. Many states implemented a form of payment throughout the 20th century that required employees to be paid a minimum enumeration for their services to the organization. This is termed as the minimum wage. My thesis is that despite the initial good intentions that brought the law into place, it has fundamentally come to the detriment of the employees and businesses in a broader-spectrum and should, therefore, be abolished for a meritocratic structure of payment.
Performance-based pay increases the value of the workforce. When using a performance-based system of compensation, the value of the workforce becomes higher, and the retention of such a workforce becomes easier. According to Sturman et al. (2003), due to the pressure on organizations to retain their top talent, pay based on performance goes a long way in guaranteeing retention of the best employees. Performance-based compensation also rewards employee performance and also increases the employee’s motivation to work hard, raising a worker’s morale and loyalty. Performance-based pay would, therefore, without a doubt, enable the organization to function at a higher capacity.
The minimum wage has led to higher levels of unemployment and has been harmful to the group that the policy was initially deliberated to safeguard. In Giuliano’s (2013) study, he cited that a substantial rise in the minimum wage resulted in organizations lowering their recruitment numbers, particularly for low pay earning personnel and laying off some of the workers. This would, therefore, be beneficial to some extent for those members in employment but would be detrimental to people seeking to be employed. Meer & West (2015) found that the minimum wage makes it difficult for small businesses to run successfully and efficiently. If companies want to keep their wage bill low and manageable, hiring fewer employees now seems like not only a viable alternative but more so a necessity. Minimum wage policies in the long run, therefore, appear to be hurting employers and individuals seeking employment.
On the other hand, people argue that the disruption of the minimum wage can lead to exploitation of workers. The minimum wage was put in place to guarantee that workers were protected and that their living standards would improve. Neuman & Wascher (2008) denoted that the importance of the minimum wage was also to try and ensure income equality. They go on to say the initial results were encouraging. Minimum wage can, to an extent, be a useful way of ensuring that workers are fairly treated.
In conclusion, the minimum wage has had adverse effects on the workforce. Businesses should have minimal intervention from the government, which enables a free-market approach. This would ensure that prices and employee wages are dictated by the employees’ abilities and the market itself. Introducing performance-based pay would be beneficial in ensuring that the workforce is competent and that the best worker is rewarded, therefore creating a pleasant working environment beneficial to both employee and employer. Despite the arguments that the minimum wage has helped the workforce, it has come to the detriment of both the employer and employee. It is, therefore, of utmost importance that a performance pay system is implemented.