How Can Low Wages Affect Employees in an Organization?

by Ruth Mayhew; Updated September 26, 2017

Some employers struggle to pay top wages. Economic conditions, organizational changes and demand for business services and products affect an employer’s ability to compensate employees at extremely competitive wages. Low wages can have devastating effects on employees in terms of anger and disappointment, stress, low morale and unemployment.

Anger

When employees believe they should be earning more money, they exhibit signs of overall dissatisfaction. As a result, their workplace relationships suffer, particularly the professional relationships they have with supervisors and managers. Employees who spend too much time thinking about their supervisors and managers earning more money can become guilty of displaced anger. Instead of directing their anger toward compensation and benefits specialists who determine the salary structure or toward executive leadership for not reconstructing compensation, they may feel inadequate compared to managers who earn higher wages.

Stress

Employees who don’t earn as much as they should may experience stress related to financial worries. Working in a job that doesn’t pay enough to make ends meet can increase stress due to the inability to meet monthly obligations. That stress affects families and can spill over into the workplace, fostering low morale and productivity. If employees aren’t earning enough to support themselves and their families, the irritability and frustration can affect self-esteem and overall well-being. In “Effects of Low-Wage Employment on Family Well-Being,” Ohio State professor Toby L. Parcel cites a 1984 study of parent-child relationships that suffer as a result of low wages and states: “Low wages limit the material resources parents can provide for their children, and low wages can produce feelings of distress that affect parent-child interaction.”

Low Morale

Low morale is often connected to employee dissatisfaction. Employees who are dissatisfied with working conditions -- including compensation -- may demonstrate apathy towards their job duties and begin to question the reasons they stay with the same employer. Low morale can turn into feelings of despair and worthlessness, which can be detrimental and even dangerous in the workplace. In some cases, employees who internalize extreme despair and worthlessness may find themselves involved in workplace conflicts more often than other employees.

Unemployment

Motivation levels drop when employees don’t receive the compensation to which they are entitled. They may believe there’s no use in putting forth the effort to do a good job when their pay is significantly lower than competitors’ wages. Low levels of motivation have an impact on performance, and poor performance affects the organization’s bottom line. Poor performance can affect the quality of products and services. In turn, customers will eventually seek the quality and quantity they deserve from a competitor. Losing business to competitors will ultimately make your organization’s profits drop and end in underemployment and, perhaps, unemployment.

About the Author

Ruth Mayhew began writing in 1985. Her work appears in "The Multi-Generational Workforce in the Health Care Industry" and "Human Resources Managers Appraisal Schemes." Mayhew earned senior professional human resources certification from the Human Resources Certification Institute and holds a Master of Arts in sociology from the University of Missouri-Kansas City.