Essay on "Seattle Minimum Wage"

Essay 4 pages (1445 words) Sources: 4 Style: MLA

[EXCERPT] . . . .

4)

I actually agree with this statement. Meyers (2014) points out that the minimum wage in Seattle is up to 60% of the median real wage. While he notes that there are negative economic consequence to this, the closer the minimum wage is to the median wage, the more significant the opportunity costs of quitting your job are. If you make $9/hr, you have strong incentive to move around in your work. If you lose your job or have your job, you are still poor either way. Plus, there is more room for upward mobility. At 60%, there is less opportunity for an unskilled worker to move up the ladder. Plus, if welfare rates remain the same then there is a much greater opportunity cost, both in terms of poverty level and in terms of upward mobility, to quitting. People really will stay in their jobs longer because they have some incentive to do so. Whether that offsets the cost of higher labor, I am more skeptical of that.

5)

I do not agree with this statement. For any one individual, the statement is true. A person with better training will earn better pay. But this does not work on the aggregate level. In the total economy, the jobs that are available reflect the work that needs to be done, not the training of the workers. To take this to the extreme, if everybody in the U.S. was a highly trained nuclear physicist, that would not guarantee them all work as nuclear physicists. Some people would still be growing food, cooking food, mopping floors etc. because that is work that needs to be done. Minimum wage employment is supply-driven, and the entire population cannot educate its way out of that. Somebody will always need to do that work. There will always be a floor.

6)

I believe city-based minimum wages will become popular, yes. In many cities, especially back east, the urban area is relatively poor but still attracts people from the wealthier outlying areas to the city. Anything the city can do to keep more of that suburban money inside city limits is going to be popular, and certainly with the electorate of the city itself. The $15 minimum wage will not work if everybody does it, but it will definitely be enacted in other cities as well.

7)

In the short-run, in Seattle, it is going to have a positive effect. In the long-run, I am less convinced. First, if surrounding areas pass this wage (and they might, to attract low-wage workers if there are MacJobs going unfilled in their city), then employment, wages and prices will more or less return to the original equilibrium point, because nothing will have changed. I do not see a negative outcome for Seattle, because it was a pioneer on the $15 minimum wage, but eventually wages will return to equilibrium. There will be a few less low-wage jobs that were transferred out of Seattle, but those that remain will attract better workers than low-wage jobs in adjacent cities. Once the process of wage equalization across King County is done, there will be a new equilibrium point and it probably will not look much different from the old equilibrium point. Low wage workers will have slightly more buying power, but there will be a few less low wage jobs, and while prices will be higher, over time there will be wage inflation and the minimum wage will fall as a percentage of the median real wage. Government intervention can affect economic circumstances in the short run, because of price and wage stickiness, but in the long run equilibrium is more likely than not to be restored, such that the policy itself is not as effective in the long run as it will be in the short run.

References

City of Seattle. (2014). $15 minimum wage. Office of the Mayor. Retrieved November 13, 2014 from http://murray.seattle.gov/minimumwage/#sthash.k2E2KULE.kWU1ikDq.dpbs

Hanauer, N. (2013). The capitalist's case for a $15 minimum wage. Bloomberg. Retrieved November 13, 2014 from http://www.bloombergview.com/articles/2013-06-19/the-capitalist-s-case-for-a-15-minimum-wage

Meyers, L. (2014) A $15/hr minimum wage is bad for business. InvestorPlace. Retrieved November 13, 2014 from http://investorplace.com/investorpolitics/minimum-wage-business/

Ng, A. (2014). What SeaTac tells us about the $15 minimum wage. NorthWest Asian Weekly. Retrieved… READ MORE

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