Minimum wage has always been a hot topic among economists. Some may consider it a necessity to maintain a human standard of living. Others might oppose mining wage as it conflicts with the right of the business owners to pay as they choose.
In this article, I am not going to dabble in the justifications for this policy. Nor will I discuss its economic impact. My goal in this article is to explain why YOU should never pay minimum wage to your employees.
We cannot talk about the modern market without citing Adam Smith. In his works, Smith emphasizes the importance of personal motivation for each and every one of us. To best manage a business or the economy overall we should try to maximize the motivation to work.
It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest – Adam Smith
Hiring is always a hassle, every HR knows this. It is hard to find quality workers that suit your need. Paying minimum wage makes hiring even harder because setting a worker’s wage to the bare minimum the law allow does not motivate quality workers to apply to your job openings.
You want to distinguish yourself from your competitors. A good way to do it is by paying more especially when your competition offers a minimum. Doing so will benefit future hiring as it builds a good reputation for your business.
Minimum wage also has an indirect effect on your employees. The wage you pay your employees is one of the main factors of appreciation. By paying your workers the bare minimum allowed by the law you send a clear message that their work is not valuable. You cannot get an employee motivated by telling him he is not worthwhile.
Managing employees is a hard task. For this reason, you should always aspire for quality people who feel appreciated and get motivated by it.