HIGHER WAGES FOR LOW INCOME WORKERS LEADS TO HIGHER PRODUCTIVITY

Wages are usually determined using the forces of supply and demand. A manufacturer plans on how to make and sell various commodities. He assembles the resources he has and hires talented employees hoping that he will recover the cost of these expenses from selling the finished product (Duke, 2016). The manufacturer offers various wages which may not be high enough to cater for its needs hence the need to look for more innovative solutions. A lot of people assert that job satisfaction and a great sense of purpose bring about an employee's productivity. It is clear that what brought about growth of productivity in the 1930s was innovation especially in technology. This made the firms abilities to afford various policies which increased their employee's income since they were able to increase productivity through the use of new equipment which featured technology which was innovative such as electrification and the internal combustion engine.

One advantage of high wages is that it tends to attract workers who are productive and capable of doing their work properly. Offering high wages attracted a pool of applicants who had a high IQ, the required motivation and had good scores on their personality tests which ensured they were a perfect match for jobs that were advertised (Bo et al, 2013). In addition, the firm that is first in offering high wages has the possibility of attracting and retaining more workers who are productive. Though money is important, it is not the only contributing factor to productivity of employees. One major drive for productivity is how people generally feel while at work. For instance, how much they feel valued, respected and given chances for training or to develop (Pelley, 2017).