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How Minimum Wage Raises Affect Your Employees

Image of human hands holding plant shaped like arrowAn increase in the minimum wage is meant to get as many people as possible off the poverty bracket. It increases their disposable income and purchasing power. However, there are many unforeseen ripple effects to watch. 

An increase in the minimum wage also affects the paying organization. The business or organization paying more has to adjust compensation for everyone based on the new pay scale. Beyond the economic level, employees receive a morale boost, helping them to be more productive.

Increasing minimum wage comes with both positive and negative effects on employees. Some of the results are direct, while others are indirect. In other cases, the perception of the employee will determine the ultimate impact of the wage increase.

Here is a deeper look at the effects of an increase in the minimum wage on employees.


Improved work morale

Every worker is looking for an opportunity to earn more while working for the same number of hours. This is the promise fulfilled by increasing the minimum wage. The employee feels that they are taking home more. Consequently, they will appear in the office happier and ready to work.

The morale to work also comes from the fact that the employee can afford more necessities than before. For instance, they can pay insurance, buy a car, and live in a better house without struggling. They find a reason to come to work and deliver to the expectations. With happier employees, the company is guaranteed more profit.


More productivity 

The joy of working is in the compensation the employee takes home. If an employee feels that they will take home a salary worth his time, they will reciprocate by meeting the employer's expectations. You will experience fewer excuses about absenteeism and sick-offs. In some cases, employees will turn up even when under pressure because the few hours they work will help them achieve their personal goals faster.

The positive vibe experienced at the workplace will affect everyone in the line of work. For instance, junior employees who receive a pay rise will push their seniors to be more productive. The ripple effect will spread to the entire department and eventually the office. It results in excellent performance for the organization as a whole.


Quick and easier attainment of goals

A higher salary means that employees can spend. They see the realization of their dream through work. They can buy better cars, live in nicer houses, and tour their dream destinations. This realization has a significant impact on their morale. A business or organization becomes a path through which the dreams of employees can be attained. The employees will do anything to ensure that these dreams are achieved.

Employees become bigger dreamers because they can see a possibility while working for your organization. For instance, an employee who could not advance his studies because of reduced income finds the perfect opportunity now that he is earning more. The increase in productivity will extend to personal endeavors and professional development because the employees believe in themselves and their potential more than before.


More creativity and participation in company affairs

Employees stay in workstations where they feel appreciated. One of the most powerful indicators of appreciation is a decent wage. Once they see the benefits of a higher salary, the employees will be creative. They will want to support your projects, including adding ideas to make the work environment better. As employees feel more like a part of the company, they will offer their resources, especially ideas, to grow your company.


Negative effects of an increase in the minimum wage

Increasing minimum wage means that the employer will be left with less money. Some may opt to reduce the number of employees or cut down work hours. Such changes may affect the morale of workers, causing them to cast eyes elsewhere. Employers may also put more pressure on employees to perform in a bid to compensate for the additional pay. Such stress may affect creativity and productivity. You may experience a large employee turnover or a decline in productivity compared to the hours worked.

An increase in the minimum wage is a delicate balance that requires professional handling by the HR department. As the business or organization counts losses, it must find a clever way to compensate. The easiest option is to work on increasing the productivity of your employees. Such productivity benefits the worker and the organization in equal measure.

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About the Author: Timothy Miller is a digital marketing expert and freelance writer with He helps students to attain their entrepreneurship goals while still in college. He also helps them to gain a footing in the digital market, making it easier for them to establish their businesses.

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