Labor advocates argue that pegging the daily wage of workers at a minimum works to the advantage of employers than to the toiling masses who are supposed to benefit from it.
These advocates reason out that a minimum wage is pegged not based on the averaged actual needs of the working class but rather it is used as a tool to mathematically determine profit. With a clear cut minimum wage, employers can assure themselves of the profit they can earn.
This contradicting utilization of the minimum wage between employees and employers is what is making the workers’ plea for a wage hike hard to grant by the employers. And if ever granted, it is always way below what the workers are asking for based on their actual needs.
The usual defense of employers in opposing wage increases is that many companies, particularly those belonging to the small and medium enterprises category, will fold up if wages are raised. The labor sector does not buy this because a company determines the number of employees they hire based on how many they need.
So profitability of any enterprise is not determined by how much it is paying its employees but by the size of its employee complement needed to carry out its business operations. An SME will certainly not hire hundreds of employees if its operations only need six employees, right?
Remember also that wages paid to workers are always tucked into the cost of the output before its price is set. In other words, wages paid to workers are not drawn from the personal bank accounts of employers but imputed as part of the cost of production.
If this is the case, why has it become so hard for employers to share with their workers the fruits of their own labor through higher wages? Studies after studies show that better wages for workers result in better productivity thus ensure profitability.
In the first place, labor is the indispensable partner of capital. Even in the highly mechanized enterprises, workers are still needed. An employer who does not look at his workers as his indispensable partners should not hire workers. They ought to do everything what his workers should have done for his company.
If the business is in the field of agriculture, for example, let the landowner do everything from preparing the land, to sowing the seeds and caring for the sprouts till they become full grown crops, to harvesting the crops, to carrying them to the warehouse, then have them brought to the market or factory and prepare afterwards the land for the next cropping season.
Let’s see if the employer would be able to do all these by himself. The employer will have to engage the helping hand of workers to partner with him to ensure productivity and profitability of his agricultural enterprise, in our example, because no matter how he wants not to pay a single centavo as wage for any worker, he will need them.
This is the logic why workers should be treated as partners of capital. And not just ordinary partners but indispensable partners.
Sadly, this is not how employers look at labor making any discussion about wage hikes a tall order for them. But if employers will only look at labor as indispensable partners, of which they are, wage hike discussions come in handy.
The situation is made more complicated by the fact that while wages are pegged at a minimum, employers are not required by law to peg their profits at a minimum also. Here lies the problem when wages are the subject between labor and capital. Employers want a minimum wage but refuse to have their profits pegged at a minimum. They don’t even want their profits declared.
Except for listed companies, others are not required to make public their net income. And it is these listed companies, based on experience, which pay wages higher than the minimum to their workers. During minimum wage hike discussions, these listed companies are more receptive to increasing their workers’ pay knowing that productivity is the causal result of better pay and benefits.
If employers just treat their employees as their indispensable partners, wage hikes will not be a thorn in their throats, thus just make them behave as if they are against their employees’ welfare and benefit.