http://www.washingtonpost.com/blogs/she-the-people/wp/2014/02/19/cbo-minimum-wage-report-creates-quandary-for-white-house/
One week ago, President Obama sighed an executive order to raise the federal minimum wage for workers under new federal contracts from $7.25 an hour to $10.10. Although, according to the news, this policy will increase the income of 16.5 million workers and help about a million people out of poverty. This Tuesday, the CBO reported that "raising the minimum wage to $10.10 would cause 500,000 people to lose their jobs over the next two years." Because requiring companies to pay their workers more will let them hire fewer workers. According to estimation from the National Women’s Law Center, women make up more than three-quarters of the workers in the 10 largest low-wage occupations. These women may be lucky ones see the increase in wages or be unlucky ones who lose their jobs.
This certainly appears to be a case of President Obama trying to do too many things at the same time. While certainly all the goals he is attempting to accomplish are admirable, they are often at odds with one another. President Obama has in the last couple years tried to give health care to more people, raise the minimum wage, and get more people employed. The problem is that accomplishing all three goals simultaneously is a near impossibility.
ReplyDeleteThere seems to be a lack of clear prioritization of one goal over another, which is what I think is really making President Obama's actions hard to follow. Without a clearer idea of what he hopes to accomplish before he leaves office, we can't be sure which effect will be most pronounced.
This comment has been removed by the author.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteI think the wage increase will affect everyone not only women. The increasing in wage will affect people in the short run greatly, but looking at it in the long the run, the unemployment rate should return back to normal. It's no surprise that raising minimum wage to $ 10.10 will cause over 500,000 job lose because firms exist to make profit. If they have to pay more to their employees of course they will cut down on their workers. But as more employees have more disposable income to spend on goods and services, producer will hire more worker to increase production.
ReplyDeleteI think raising the minimum wage rate is an oxymoron. You're trying to raise it so that people have higher purchasing power and higher incomes, but yet, as you're doing that, you're causing many people to lose jobs (500,000 jobs as Xiaoshu stated). In doing this, the disparity of wealth were disperse greater, something Obama has been against (trying to "distribute the wealth" his whole tenure as president). In addition to this, you'll see unemployment skyrocket, and teen employment will skyrocket especially, since businesses and firms won't be as willing to hire people due to less income. Lower amount of jobs means more people that will have to rely on government help, raising taxes on people that are fortunate enough to work, thus producing an unending cycle of bad economies and possibly another economic collapse in the distant future.
ReplyDeleteI think that Obama's order will not does work at all. Due to globalization, the company of developed countries struggles for lower price product. The lower price product comes from lower payment. If Obama want to raise minimum wage, he should stop to trade with developping countries to protect US companies. In my opinion, his order will miss. A lot of companies will lost the competitive power
ReplyDeleteI think this is something that need to be looked into in that the minimum wage needs to raise because their are some companies who are taking advantage of these workers paying them very little for extremely hard work. On the other hand their can not be a huge unemployment increase due to the increase of minimum wage so therefore i think this needs to be looked at again
ReplyDeleteI think that this quote from the end of the article sums up the issue very well:
ReplyDelete"In the end, whether raising the minimum wage is a good idea depends on whether increasing the income for 16.5 million outweighs the loss of income for 500,000 workers. The calculus suggests that the benefits do outweigh the costs. Yet, those who lose from this policy may feel that they are being short-changed in this calculation."
The core of the issue is that there will be benefits and drawbacks of raising the minimum wage. The problem is that is there a true way to know how this will impact the economy until it is implemented?