Question

2. In theory, what are some of the wage and employment effects of outsourcing?   3. What is the ‘textbook’ definition of the “minimum wage”? 4, In reality, should the minimum wage in the Bay Area be raised to $20 per hour? Why or why not? What are some of the arguments in favor of this proposal, and against this proposal?   5. The San Jose Mercury News reported that the current Administration is expected to suspend H-1B visas for highly skilled workers, among others, until the end of 2020. This program allows firms to hire up to 85,000 highly skilled foreign professionals each year (SJMN 6\24\20). Please discuss the potential costs and benefits of this policy. 6. What is a ‘right-to-work’ law, in theory?   7. What has happened to union membership in this country since 1960? Why? What are some of the forces behind this change?   8. In theory, what are some of the most important goals, and strategies, of unions?   9. In theory, what are some of the benefits, and costs, of unions? 10. Would you ever consider applying for, and working in, a job that is unionized? Why or why not? 1 What is a ‘monopsony’ in theory?

Answer 1

1. What is a ‘monopsony’ in theory?
- A monopsony in theory is a market situation where there is only one buyer, who is the major purchaser of all goods and services. So, for many producerm, there is only one consumer.

2. In theory, what are some of the wage and employment effects of outsourcing ?
- When firms outsource to foreign markets or firms, labor costs are reduced upon hiring low cost workers in other countries. This directly results in lowering of wages in the home country as supply of low-skilled labor increases, which in turn affects workers as minimum wage is also lowered. Thus, employment increases as more labor is available for lower wages, but at the cost of social welfare, as minimum wage might be lowered.

3. What is the ‘textbook’ definition of the “minimum wage” ?
- A minimum wage is the lowest limit of reimbursement or stipend that an employer needs to legally pay his or her employees. It can also be defined as the limit below which workers or employees would not want to sell their labor hour.

4. In reality, should the minimum wage in the Bay Area be raised to $20 per hour? Why or why not? What are some of the arguments in favor of this proposal, and against this proposal?
- Based on the fact that the costs of living in the Bay Area are relatively higher, it does make sense to raise the minimum wage to $20 per hour.
To argue 'for' this proposal, it can be said that workers felt their higher costs of living in the area were way higher than what they earned. Also, a wage raise could lead to better social welfare and happiness.
Arguments 'againts' this proposal would be that higher standards of living would reflect on rising price levels of goods and services, rise in income inequality , etc.

5. The San Jose Mercury News reported that the current Administration is expected to suspend H-1B visas for highly skilled workers, among others, until the end of 2020. This program allows firms to hire up to 85,000 highly skilled foreign professionals each year (SJMN 6\24\20). Please discuss the potential costs and benefits of this policy.
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Potential Costs :

• Minimum wages for domestic workers might be needed to be raised.
• Productivity might be compromised, given high-skilled workers will be traded off.
• Firms would not benefit and their costs of operations would increase.

Potential Benefits :

• Domestic American workers would see a rise in employment rates
• More jobs would be available for low-skilled American workers owing to the fact that minimum wage might be lowered.

6. What is a ‘right-to-work’ law, in theory?
- A right to work law, bans union-security agreements between labor unions and employers, i.e. the members of unionized workplaces are prohibited to negotiate contractual terms.