The Cause and Effect of Low Wages
By Leonardo Alfaro
Low wages affect everyone, But what exactly is it?
Low wage labor can be defined as work that is paid at a low rate, has no real benefits, no union sponsorship, unfair treatment and many other amenities an employee deserves for their diligence in the working field. The cause and effect from low wages is immense, people in the workforce are treated unfairly and greatly under appreciated. Low wages describes the jobs or places in which a person is being paid very little for work they should be compensated for. Sadly during a huge crisis the so called efficient labor market in the United States can easily be affected in which we must pay with human and economic costs. Equilibrium in society is difficult to achieve because of the decline in employment and the rise in low wages.
The abandonment of full employment
The reason for a huge wage inequality is because inefficient policies that lead to high rates of unemployment that ruin wage growth all throughout the economic ladder, the lower-class and middle-class always get the short end of the stick compared to the high-class. When in recovery after a recession the lower and middle class people must deal with unemployment, low wages, wage stagnation, less benefits, and unjust labor standards. The wage inequality can be fixed when we begin to focus on harsh economic policies and local governments’ spending cutbacks.
Declining union density
A significant effect on the lives and wages of employees appears when corporations and CEOs disrespect the unionization of workers by attempting to eradicate it. Workers lose that benefit of having a community where they can fight as a collective to bargain for better wages, benefits, setting specific norms and labor standards. The decline of unions weakens the worker’s pay and working conditions which ultimately makes a corporation insufficient.
Other labor market policies and business practices
labor market policies and business practices have had a huge variety of alterations that
weakened wage growth for hardworking low-class and middle-class employees. Inflation-adjusted value of the federal minimum wage is a main issue that explains the increase in wage gap. Lower-class and middle-class both have to struggle with inflation and wage stagnation while the high-class coasts by just fine.
The unleashing of the top 1 percent, particularly finance and CEOs
The 1 percent does not care about their employees and their low wages. The employees work hard but still happen to earn far less than the top members of corporations because they are greedy and pay themselves an unfair higher wage simply due to hierarchy and power. Financial deregulation is the main reason for this sense of injustice in the working field. The only necessary solution to restore equilibrium in wage distribution is to downsize the excessive wage growth at the top of the ladder.
Globalization policies
A huge component to the surge in low wages is economic globalization. What makes this issue problematic is that it’s profoundly controlled by American policy decisions which ultimately aims to secure corporate interests up to the highest standard and allows for a decline in labor standards. Another thing undercutting wages is the use of international economic policy, CEOs take advantage of less developed countries to make the goods for a cheaper price instead of paying for labor in the states.
Why are the issues related to low wages important?
Millions of Americans across the country have a similar battle. Low wages have forced many people to struggle to survive in a society with corporations that don’t respect their employees’ time, money, and diligence. Low-class and middle-class citizens had to adapt to unbelievable circumstances dealing with an unbalanced labor market that doesn’t provide workers any proper incentives to perform at a job with high quality work ethic, efficient production value, and a positive tempo. There is a need for change immediately in how employees are treated because while they struggle with low wages and everything else attached to it, the high-class people and corporations continue to treat themselves better than anyone else. One big issue around low-wage jobs is the percentage of total employment in the U.S. which increased as middle-wage jobs have decreased due to the fall of industries and an immense lack of consistent education that allows employees to learn efficient job skills.
“ In addition, the poor quality of low-wage employment leads to a cycle of attrition and replacement that drives the labor market toward a less-than-optimal equilibrium with neither firms nor workers incented to invest in the job. This takes a steep toll on workers’ skills and opportunities for training: Low wage earners have little incentive to spend scarce time and hard-earned money building skills; meanwhile, employers, though frequently lamenting skill gaps, have little incentive to train workers who they expect to leave. The labor market arrives at a “low skill equilibrium.”
Generally most people have to struggle when working 9 am to 5 pm jobs especially in today’s economy with low wages and inflation making everyday harder. The huge problem is that a lot of people struggle with low wages, alternating schedules that don’t fit well, few to no benefits at all, and limited opportunities for advancement in the corporate ladder. Economic growth can come to a balance if we stop allowing corporations to unfairly distribute wages and taking advantage of people with no equal reward. Corporations consistently take advantage of minorities, they expect efficiency but yet what they pay is insufficient. According to the article, The Struggles of Low-Wage Work, “Women and people of color are disproportionately likely to have jobs paying low wages. Despite some economic growth after the Great Recession and now facing an uncertain recovery, wages have remained low. A worker being paid median wages did not earn much more in 2017 than 1979 when adjusted for inflation.” Equilibrium in the workplace must be established for society to run efficiently and effectively with no backlash.
What were The Effects of Covid-19?
The pandemic Covid-19 and everything that occurred because of it impacted society incredibly, no one saw this coming. Those that were affected the most were people who had low wage jobs, millions of others lost their jobs and income with no way to stabilize themselves. According to the article, The Struggles of Low-Wage Work, “At the start of the COVID- 19 pandemic, 20.5 million workers lost their jobs in April. During the COVID-19 recession, workers of color saw higher rates of unemployment compared to white workers. The rate of housing insecurity and food insecurity increased to 10.3 and 7.3 percent, respectively.”
The truth is apparent that most of the people who were in the unemployment percentile were POC and minorities. Thanks to the pandemic there was a distinct separation in essential and nonessential workers, most people who weren’t essential and were losing out on money were minorities.
Consequences
People of color and minorities are highly impacted by low wages and unfair job standards
Inflation doesn’t allow people to prosper or advance in life because of low wages
Low class and middle class people are now in a similar situation of financial ruins
Corporations and high class people continue to prosper while others stay stagnant
People begin to struggle to the brink of bankruptcy with little to no options
Society and the economy lose their integrity and a recession occurs
Personal View
The issue of low wages and every single after effect people have to endure is important to me because of the fact that I know so many people who’ve dealt with scenarios like this.
I believe that my family, friends, community, and society should address the fact that there is a need for change. There is a need for balance and equilibrium in the workforce. All people should have the same amount of equal opportunity and pay. I’ve personally had a lot of family members and family friends who came from a different country to attempt to get better wages for their work ethic. Diligence is all people of color have, so it’s sad to see how badly corporations and jobs take advantage of their hard workers. I’m soon to graduate and become officially a part of the workforce so this is why I aim to fight for my right to be paid based on what my work ethic is worth just like everyone else. This fight for equality may be tough but in the end the goal is far beyond worth it. The people deserve a voice to address their struggle and pain to be valued as they are, amazingly diligent employees.
People affected by Low Wages
Victoria:
By wanting to improve my skills and experience within the workforce, I continue to search for better jobs with better wages to sustain my lifestyle and my family.
Milton :
Low wages have affected me to the point of joining the army. I am Working part time in the army and full time in a civilian job where I’m able to maintain a somewhat comfortable lifestyle.
Jasmine:
Low wages have affected me in a lot of different ways. It took longer to save for school, longer to build my personal savings, and caused me to live paycheck to paycheck.
Working part time and going to school is hard but the job helps me support myself through it all.
Sources
Adewale, Maye & Asha Banerjee, “The Struggles of Low-Wage Work” clasp.org, June 16, 2021, https://www.clasp.org/publications/fact-sheet/struggles-low-wage-work-0/
Bateman, Nicole & Ross, Martha, “Low-Wage Work Is More Pervasive Than You Think, And There Aren’t Enough “Good Jobs” To Go Around.” brookings.edu, November 21, 2019,
Hund-Mejean, Martina & Escobari Marcela, “Our Employment System has Failed Low-Wage Worker, How Can We Rebuild?,” brookings.edu ,April 28, 2020,
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