- March 11, 2013
- Posted by: essay
- Category: Term paper writing
Today, the regulation of minimum wages is essential to maintain the high standards of living and to prevent the emergence of social conflicts in the society. At this point, well-developed countries traditionally outpace other countries in terms of minimum wages. In this respect, it is possible to refer to the example of the US, where the level of minimum wages is consistently higher than in other countries, such as China. At the same time, China is the emerging economy, which is characterized by an extremely low minimum wages, especially compared to the US. In such a context, the question arises whether the national economy can grow at cost of low minimum wages level but it is obvious that the minimum wages level set standards of living. Therefore, countries can make a choice between the high standards of living and slow economic growth but high minimum wages level or to accelerate the economic growth at costs of minimum wages.
In actuality, the level of minimum wages in the US and China vary dramatically. At this point, it is possible to refer to Table 1 ”“ 4, which reveal the wide gap in minimum wages between the USA and China. In this respect, it is important to place emphasis on the fact that the wide gap is determined by the consistent difference in the economic development of the US and China. In actuality, China accelerates its economic development to keep pace with the US and other leading nations. At the same time, human rights and liberties are often ignored in China. As a result, the end, to accelerate economic growth, justified means, even if the means imply low level of minimum wages and poverty of a large part of the population. On the other hand, unlike the US, which has detailed statistics on the minimum wages in the country, China cannot always provide accurate information on this issue because Chinese economy and China at large are not as transparent as American economy and the US. As a result, the comparison of minimum wages in these countries cannot be absolutely objective and accurate.
Nevertheless, on analyzing the statistics presented in Table 1-4, it is possible to estimate that the minimum wages level in the US outpace consistently the minimum wages level in China. At this point, it is worth mentioning the fact that the yuan/US dollar rate is just 0,15 that means that one yuan costs just USD 0,15. In such a way, the minimum wages in the US are several times higher compared to China. At this point, it is important to place emphasis on the fact that Chinese standards of living are consistently lower compared to the US. Moreover, the population of China is larger compared to the population of the US. As a result, even if China catches up with the economic development of the US in net values than the earnings per capita will be still lower in China compared to the US. In addition, Chinese economy suffered from backwardness compared to the US one. Therefore, China needed to make a breakthrough to catch up with the US economy and reach the level of well-developed countries. However, China still fails to close the gap with well-developed countries. In such a situation, China regulates minimum wages to maintain its fast economy development because the cheap labor force is one of the major competitive advantage of the Chinese economy in the global market. In fact, the low price of Chinese products is one of the major causes why people buy them, whereas the quality of these products is not always high. In this regard, the share of wages in the price of Chinese products is low and the low minimum wages decrease the price of Chinese products even more that makes Chinese products and, therefore, Chinese economy more competitive in the global market. The advantageous competitive position in the global market, in its turn, provides China with ample opportunities for the accelerated economy growth.
In such a situation, the US cannot compete with China because the US cannot drop its minimum wages to the level of Chinese ones. In this regard, the high standards of living, transparency of the American economy and the public control over the government are major factors that prevent the US authorities and business from dropping minimum wages. As a result, the US has to maintain its relatively high level of minimum wages to provide affordable conditions of living for low- and semi-qualified employees, who receive minimum wages as well as other employees, who need the set minimum wages to meet their standards of living. At the same time, the decrease or refusal of the US authorities from the regulation of minimum wages may provoke serious social conflicts within the society because a large part of the society will lose means for living and the open social disobedience will be the only way to regain their socioeconomic position. Today, the regulation of minimum wages allows to maintain the social stability in the US and steady economic growth of the country.
Thus, taking into account all above mentioned, it is important to place emphasis on the fact that the regulation of minimum wages in the US and China differs consistently. The US authorities and economy are more transparent compared to Chinese ones. As a result, Americans authorities have to regulate strictly minimum wages, whereas Chinese authorities can manipulate with minimum wages respectively to current economic needs of the country. In such a situation, China uses the low level of minimum wages to boost the economic growth, whereas the US has to keep regulating minimum wages and maintain high standards of living even at cost of the economic growth.