Wage and Benefits in the USA - Term Paper Example

Wage and Benefits Introduction A wage is any monetary compensation that an employee is paid by an employer especially performing acertain task or work. Also known as remuneration, payment of the wage may be calculated as piece rate of a task wage. In some cases, it is usually calculated at a daily or hourly rate depending on the measured quantity of the job done. Generally, wage payment tends to contrast with salaried work whereby the employer has to pay the employee on an arranged figure at a steady interval either monthly or weekly irrespective of the worked hours, with commission, which conditions employee performance pay (Even, 2003). On the other hand, employee benefits entail various non-wage compensation types that organizational employees are provided in addition to their salaries and normal wages. In a situation where an organizational employee wishes to exchange wages in terms of cash for a different form of benefit then that is known as a salary packaging (Addison, 2009). Examples of benefits include:- disability income protection, housing benefits, retirement benefits, group insurance such as dental, health and life, sick leave, tuition reimbursement, profit sharing, education funding, vacation either paid or non-paid and other specialized benefits. In most cases, employee benefits helps in increasing the economic security of the organizational members. By doing this, it helps in improving worker retention in the organization (Addison, 2009). Minimum wage and standards of living Minimum wage is generally the lowest daily, monthly and even hourly remuneration in which the organization employers may legally pay to its employees. In simple terms, minimum wage remains the lowest wage in which organizational worker may sell his/her labor to the company (Addison, 2009).On the other hand, standards of living entail wealth and comfort levels, necessities available and material goods that are available to a particular socioeconomic class in a given geographic area. Generally, standards of living includes aspects such as employment availability, income, poverty rate, class disparity, inflation rate, gross domestic product, affordability of housing, life expectancy among others (Hirsch, 2011). How the government determines the minimum wage and standard of living In the United States, the standards of living and the minimum wage is determined by the government and is set at the state and federal levels. In this case, each state determines the option at which it would set its minimum wage equal or higher to the federal level. In determining the minimum wage law, in most cases, the government focuses on various key areas including political ideologies, unionization, right to work laws and the influence of small business (Even, 2003). Research studies indicate that, higher unionization levels, liberal ideology and higher wage rates are some of the factors, which determine how Congressman or the Senator would vote for the increase or lowering of the minimum wage. This mostly applies to the federal government. There is also the indication where income issues play a significant role in determining the minimum wage. Generally, larger proportions of families attaining a low income help in increasing the probability in which the government would eventually vote in favor of increase of minimum wage. Nevertheless, the higher average hourly organizational earnings increase the probability in which the government (congressional representative or the senator) would vote in towards a minimum wage. The research studies however indicate that wage levels are not significant (Even, 2003). Other indicators, which the government uses in establishing minimum wage rates and living standards, are one, which helps, in minimizing loss of jobs at the same time preserving international competitiveness. In this process, the general economic conditions are usually measured by nominal and real gross domestic product; labor demand and supply, inflations, differentials and distributions. Other factors include the productivity growth, employment terms, business operating costs, labor costs and bankruptcies trends. The prevailing average wage rates also play a significant role in determining the living standards and the minimum wage. On the state level, the minimum wage is determined by various economic variables including the unemployment rates, political variables and the average wage. Political variables include factors such as governorship, house senate and the democratic house control(Flinn, 2011). Living standards is usually determined by the collection of financial standards from the public and in this case, the financial standards help in determining the taxpayer’s capability to pay a tax liability that is delinquent in nature. Allowable living expenses in this case include the type of expenses, which have the ability of meeting the necessary expenses test. Alternatively, the government can determine the living standards in three different ways (Even, 2003). The three ways are through production approach and in this case the value added or the output, the expenditure approach and the income approach (Flinn, 2011). The production approach remains the most direct approach in which the government uses in determining the living standards. This approach tends to sum the entire outputs of enterprise class in order to arrive at a conclusion. The expenditure strategy works on the rule that, all products, must at least be bought by individuals; therefore, total product value must remain equal to total expenditure of the people while purchasing products. Lastly, the income approach tends to operate on the principle that productive factor’s incomes must remain equal to product values (Flinn, 2011). After all this is done, the government then collects financial standards from the public. The financial standards help in determining the taxpayer’s capability to pay a tax liability that is delinquent in nature and eventually determine the standards of living. How the government makes benefits available to those who make minimum wage Stereotypes of minimum wage employees mostly range from individuals holding summer jobs to part time workers. In most cases, minimum wage employees are disproportionately young between the ages of 16 to 20. Most of these individuals have occupations or are employed in the hospitality and leisure industries, retail and even in health care services(Dube, 2010).Most minimum-wage earners are below 25, which mean that they are primarily not sole providers of their families. In most cases, they live in low or middle-class households, which mean that they never solely depend on their earnings. Most of them are not through with their schooling and at least three-fifth of them are still in school pursuing their education. Three fourth of individuals in this category are older workers and live averagely (Hirsch, 2011). Minimum wage tends to hurt the disadvantaged employees job prospects. Additionally, minimum wage tends to disadvantage families living in poverty in the way they make the families struggle to live. There is minimal benefit of this program, which makes many people under the system to struggle to live. To help sort this situation, the government has to come in handy in a bid to ensure that those individuals who make minimum wage are accorded with benefits they deserve (Dube, 2010). This can be done through establishing laws, which will govern or restrict the minimum wage model in organizations. Alternatively, the government must ensure that organizations put in place laws that help in regulating organization benefits to favor these groups of individuals. As part of the law, the government must enclose laws on housing benefits, sick leave, retirement benefits and educational funding to the advantage of these groups. Establishment of these laws would enable employees benefit in various ways (Even, 2003). In most cases, employee benefits helps in increasing the economic security of the organizational members. It also helps in improving worker retention in the organization. Types of benefits Generally, there are different types of government benefits, which are available for people to depend on. In most cases, these benefits depend on the eligibility of a person. In some cases, government benefits remain common in developed countries across the globe like the unemployment benefits, food stamps, cash assistance and healthcare insurance. Unemployment benefits Unemployment benefits are generally monetary benefits which individuals collect especially when they are unemployed not through their own fault. In most cases, they are controlled and regulated through governments and tend to vary depending on location and jurisdiction. Cash assistance Almost similar to unemployment benefits, cash assistance may be government handouts especially to unable individuals. Food stamps Food stamps are generally benefits in terms of food stuff given to individuals who are not in a position to afford them. Other examples of benefits include- Disability income protection Housing benefits Retirement benefits Group insurance such as dental, health and life Sick leave Tuition reimbursement Profit sharing Education funding Vacation either paid or non-paid Other specialized benefits. Reference Addison, J. T., Blackburn, M. L., and Cotti, C. D. (2009). Do minimum wages raise employment? Evidence from the U.S. retail-trade sector. Labour Economics, 16(4):397–408. Dube, A., Lester, T. W., and Reich, M. (2010). Minimum wage effects across state borders: Estimates using contiguous counties.The Review of Economics and Statistics, 92(4):945– 964 Even, W. E. and Macpherson, D. A. (2003). The wage and employment dynamics of mini-mum wage workers.Southern Economic Journal, 69(3):676–690. Flinn, C. J. (2011).The Minimum Wage and Labor Market Outcomes. Cambridge: TheMIT Press Hirsch, B. T., Kaufman, B. E., and Zelenska, T. (2011). Minimum wage channels of adjustment. Working paper 6132, IZA. Read More