Efficiency Wage

Employers want to pay rates that are higher than the market clearing wage because they benefit their businesses. Companies pay productivity salaries for a variety of purposes. For starters, the activity has a beneficial effect on staff turnover. Employees become more loyal to the business as they are paying well. As a result, they are less likely to leave their employers. High salaries also ensure that a person wants to be working rather than be unemployed. Second, high salaries allow businesses to stop shirking. Employees are more likely to be engaged if they are paid well. Their levels of productivity also remain high and they produce high quality work. Finally, companies offering high wages are more likely to attract able workers, hence making it profitable for companies to offer efficiency wages.

Restricting imports prioritizes the interests of the workers while undermining those of consumers. This is wrong because it does not benefit either the worker or the consumer in the long-run. The decision to increase restrictions on imports in particular industries will harm workers in other industries. Industries that use the goods being imported for their manufacturing processes will be forced to pay more for it, hence offsetting this deficit by either reducing wages or laying off some of its employees. Furthermore, imports often benefit the same workers as consumers of other products. In this regard, the decision to place more emphasis on the interests of the workers will ultimately reduce the economic pie, hence causing both consumers and workers to lose. Additionally, not many jobs will be created by increased regulation of imports. Manufacturers will always prefer automation to human labor. In fact, other factors besides free trade, contribute to job loss. They include globalization and technological innovations.