The state of Connecticut is raising the minimum wage from 8.70 up to 10.10 by the year 2017. Many states and cities have been raising minimum wage with the president and senate trying to create a raise in the national minimum wage rate. The minimum wage right now is at 7.25. A couple of other states Hawaii and Maryland are also discussing raising there minimum wages. With more and more states raising the minimum wage I wonder if this will affect job growth in anyway. I personally do not think that new jobs would decrease do to any increase in minimum wage. Are companies going to stop hiring and make employees work more over time? President Obama applauded Connecticut for this move and at the same time urged Congress to pass an act on federal rate. If Congress passed an act i would be the first increase since 2009 when it went from 6.25 to 7.25.
http://money.cnn.com/2014/03/26/news/economy/connecticut-minimum-wage/index.html?iid=SF_BN_River
This situation will be interesting to follow. From what we learned in class, unemployment should rise with these new laws. My question is how soon, if at all, the LEI will indicate change
ReplyDeleteI agree with Tyler. I feel as though because the new minimum wage is so high, companies either wont be hiring as much or they will have to lay off some workers. I feel as though the rise in minimum wage will just increase the unemployment rate.
ReplyDeleteNot sure if unemployment will necessarily change, because people who are actively seeking a job should be able to still find one. However, teenagers, and people looking for side jobs in school or for other reasons may have a hard time. So even though they may not be counted in unemployed, there will be less young people with part time jobs. I don't necessarily see a change with large corporations as much as small mom and pop type shops. I don't see how they can hire someone part time after school.
ReplyDeleteClassical economic theory states that fiscal policy (in this case a binding minimum wage) will force employers to cut back on labor because they can't afford their new salaries. However, many modern economist believe that the money that is going in the hands of these minimum wage seeking employees will go directly back into the economy... in comparison to the smaller percentage of money that was previously trickling down from employers... this newly generated employee money will make up the difference in any jobs lost by layoffs - and some economists are predicting it wil actually create more jobs. The point is that the minimum wage law will distribute money into the hands of people with a higher propensity to consume... this will put more money into the economy and generate more growth.
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