Question

In: Economics

Consumers, you and your families, power the United States economy. What happens now that the wage...

Consumers, you and your families, power the United States economy. What happens now that the wage gains are starting to drop off?

Solutions

Expert Solution

When the U.S. first set a minimum wage through the 1938 Fair Labor Standards Act, the hourly rate was 25 cents. Previously, people facing up to 25% unemployment were desperate for work during the Great Depression, and employers could take advantage of it and pay very little. Employers will continue to pay less and less without a wage floor, reducing consumer purchasing power that would make less money, Cooper said. Then the minimum wage aims to minimize the power imbalance between employers and low-wage workers.

While cities, unions and activists are calling for a higher minimum wage to reduce poverty, most business leaders are pushing back out of concern that their industries will prosper when it comes to increasing the cost of payroll. Low-wage workers today, compared to their counterparts of decades ago, are more skilled, more productive, the economic footprint has grown tremendously, but these low-wage workers are doing less today than comparable workers have done decades ago.

While some employers cut jobs as a result of an increase in the minimum wage, some consider that a higher wage floor helps them to fill their positions and minimize turnover, which increases wages, even if they eat in their income. The net effect of all this, as found in most minimum wage research over the last quarter century, is that if it is set at a moderate level, the minimum wage has little or no impact on employment.

Of course, business leaders who hope to keep their operating costs low are likely to oppose a minimum wage increase, but Cooper said this is because they don't look at the broader picture of the market. Workers have increased their purchasing power with fatter paychecks, thus benefiting businesses. And with a rise in the federal minimum wage, it affects more than just one business; all other companies with different worker makeups will face similar changes to their payrolls.


Related Solutions

1. Consumers make less money income now, What happens demand of TV's today? What happens to...
1. Consumers make less money income now, What happens demand of TV's today? What happens to supply? What happens to equilibrium price? What happens to equilibrium quantity? 2. Consumers expect to make less money income in the future, What happens to demand for TV's today? What happens to supply? what happens to equilibrium price? what happens to equilibrium quantity? 3. In the market for TV's in the present period, if the price of plastic used to make TV's increases, what...
Define economy as a social institution. What is the mode of economy in the United States....
Define economy as a social institution. What is the mode of economy in the United States. Define and give examples of cultural imperialism, transnational corporations, oligopoly, shared monopoly, dual labor market, and occupational sex-segregation. Does the United states have a dual labor market?
You are now the President-elect of the United States! You campaigned on a platform of fiscal...
You are now the President-elect of the United States! You campaigned on a platform of fiscal discipline and balancing the budget. Now that you are president-elect, name one revenue initiative and name one spending initiative that you will be pursuing towards balancing the federal budget.  describe why you believe each of these two initiatives will help to balance the federal budget, reduce the deficit and, in turn, ultimately help to reduce total federal debt.
A tariff is added United States soybeans by the Chinese Government. What happens to the price...
A tariff is added United States soybeans by the Chinese Government. What happens to the price and quantity of United States soybeans in China? Use all the steps of the Hill method. The price of Soybeans is held below equilibrium in the United States. What happens to the price and quantity of soybeans? Use the Hill method=
A tariff is added United States soybeans by the Chinese Government. What happens to the price...
A tariff is added United States soybeans by the Chinese Government. What happens to the price and quantity of United States soybeans in China? Use all the steps of the Hill method.Draw the before and after tables of comparative advantage. The price of Soybeans is held below equilibrium in the United States. What happens to the price and quantity of soybeans?  Use the Hill method. Draw the before and after tables of comparative advantage.
Is the United States and imperialist power?  Has the United States grown rich by exploiting other people?...
Is the United States and imperialist power?  Has the United States grown rich by exploiting other people? Do American companies engage in fair trade?  Has and does the United States use military and political power to force others to exchange products at unfair prices?   Is imperialism central to the success of American capitalism?
In your view is the United States economy currently operating in the Keynesian, intermediate, or neoclassical...
In your view is the United States economy currently operating in the Keynesian, intermediate, or neoclassical portion of the economy’s aggregate supply curve. Why it might be important for policymakers to know which zone of the Short Run Aggregate Supply Curve (SRAS) is currently operating in?
IN YOUR OWN WORDS: Analyze the importance of the Fed for the United States economy. How...
IN YOUR OWN WORDS: Analyze the importance of the Fed for the United States economy. How important is the Fed to help stabilize the direction of the economy?
1. In your view is the United States economy currently operating in the Keynesian, intermediate, or...
1. In your view is the United States economy currently operating in the Keynesian, intermediate, or neoclassical portion of the economy’s Short Run Aggregate Supply Curve? Explain your answer carefully using the information that you have gathered regarding real GDP, unemployment, the GDP deflator, and inflation in the previous discussions. You will want to discuss the concepts of potential GDP and the natural rate of unemployment to receive full credit. 2. Explain why it might be important for policymakers to...
Use the AD/AS model to illustrate what happens to United States equilibrium GDP and the price...
Use the AD/AS model to illustrate what happens to United States equilibrium GDP and the price level under the following scenarios.  Also state what happens to national income and unemployment.  Illustrate only short run fluctuations in real GDP. 1.Canada, the number one destination of U.S. exports, goes into recession. 2.Energy prices rise throughout the economy. 3.Wages fall throughout the economy. 4.Congress passes a law lowering the income tax. 5.Businesses become more optimistic and raise their forecast ROI. Include a caption! Beside or...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT