http://www.businessweek.com/articles/2014-04-07/why-education-spending-doesnt-lead-to-economic-growth
In the us today education leads to higher wages. The median weekly earning for someone who has under a high school diploma was about 470 dollars that number rises to a little over a 1000 with a bachelors degree and to 1700 with a professional degree. This shows that schooling is worth it but does all this private investment boost the economy.
In the us public education expenditure takes up about 5% of GDP but in other countries like Kenya and Ghana education takes up nearly 15%. Public education spending is justified that increased education benefits the society. Some experts accountant for a 10% increase in GDP 1915 to 1999 because of increased educational attainment among Americans.
Saturday, April 12, 2014
Pressing Obama’s Agenda, Maryland Lawmakers Raise Minimum Wage
This article reflects on the second state to recognize Obama's push to raise the minimum wage. Maryland announced Monday that they would raise the minimum wage to $10.10 by July 2018. The law gives “... so many Maryland families the raise they deserve". Other legislators, such as Minnesota lawmakers, have agreed to raise the minimum wage to $9.50 by 2016- which may be a safer move, in my opinion. As opposed to the lawmakers in Connecticut who ended the move to raise the minimum wage $10.10 by the year 2017.
Republicans, the minority, believe that Maryland will be at a disadvantage with other states because it will reduce the labor force and force prices to increase. Some believe that this raise would cost over 500,000 jobs nationally; reversing the efforts to reduce unemployment.
Republicans, the minority, believe that Maryland will be at a disadvantage with other states because it will reduce the labor force and force prices to increase. Some believe that this raise would cost over 500,000 jobs nationally; reversing the efforts to reduce unemployment.
Finance Officials Push for Bold Action to Sustain Economic Growth
http://www.nytimes.com/2014/04/13/business/international/finance-officials-push-for-bold-action-to-sustain-economic-growth.html?ref=business&_r=0
At the World Bank and International Monetary Fund annual spring meetings, seeking for "higher growth, better quality growth, more inclusive growth and sustainable growth" is still the supreme topic. Besides the inflation,fiscal balance, interest rates and trade policy, people also focused on Ukraine this year. The fund is preparing a financial rescue package which worth $14 billion to $18 billion of increase in tax and cut in government spending, in case Ukraine problem will escalate, which will leading to a series of serious problem to Europe’s fragile recovery.
Based on the information, the economy is still sluggish with tough job market. The inflation rates are still below target. I.M.F urges Tokyo to "structural reforms to bolster its labor market, by, for instance, bringing women into the work force." This will help the economy growth in Japan a lot.
At the World Bank and International Monetary Fund annual spring meetings, seeking for "higher growth, better quality growth, more inclusive growth and sustainable growth" is still the supreme topic. Besides the inflation,fiscal balance, interest rates and trade policy, people also focused on Ukraine this year. The fund is preparing a financial rescue package which worth $14 billion to $18 billion of increase in tax and cut in government spending, in case Ukraine problem will escalate, which will leading to a series of serious problem to Europe’s fragile recovery.
Based on the information, the economy is still sluggish with tough job market. The inflation rates are still below target. I.M.F urges Tokyo to "structural reforms to bolster its labor market, by, for instance, bringing women into the work force." This will help the economy growth in Japan a lot.
Total Taxes on Wages Are Rising
Due to the financial crisis that has occurred in the past 10 years, many countries have reduced their taxes in order to stimulate economic growth. However, since 2010 concerns about the government debt rising, the government has reversed its effort on reducing taxes in order to alleviate its debt. According to the Organization for Economic Cooperation and Development, 34 countries released their annual taxing wages report. It was to the surprise of many that the average tax rates, which fell from 2007 through 2010, have since bounce back to almost equating 2007 levels. In France for example, the Organization for Economic Cooperation and Development said, “the payroll taxes paid by employers were cut to 28.7% of total labor costs in 2013, from 30.6 percent in 2010. At the same time, income taxes rates and employees payroll taxes were increased.”
http://www.nytimes.com/2014/04/12/business/economy/total-taxes-on-wages-are-rising.html?ref=economy
http://www.nytimes.com/2014/04/12/business/economy/total-taxes-on-wages-are-rising.html?ref=economy
EU takes aim at CEO paychecks
http://money.cnn.com/2014/04/09/news/economy/executive-pay-europe/index.html?iid=SF_E_River
The European Commission released proposals that would require Europe's 10,000 publicly listed companies to hold binding votes, and to say how employee and executive pay compares. Policies at each company will be subject to shareholder approval and must include "a maximum level for executive pay".
Shareholders having a vote on employee and manager salaries in a company will, theoretically, raise morale and productivity and decrease the inequality gap between CEOs and lower-paid employees. I think fair pay, for both employees and managers, is important for the structure of a business however I am reluctant to believe that shareholders know what these numbers should be. Shareholders only real involvement in the company is what they have invested in for their share due to their faith in the company. Being a shareholder is voluntary and is not permanent and so I wonder what the cap is on what sort of shareholders will be making such a vote on such an important aspect of the business structure of a company.
The European Commission released proposals that would require Europe's 10,000 publicly listed companies to hold binding votes, and to say how employee and executive pay compares. Policies at each company will be subject to shareholder approval and must include "a maximum level for executive pay".
Shareholders having a vote on employee and manager salaries in a company will, theoretically, raise morale and productivity and decrease the inequality gap between CEOs and lower-paid employees. I think fair pay, for both employees and managers, is important for the structure of a business however I am reluctant to believe that shareholders know what these numbers should be. Shareholders only real involvement in the company is what they have invested in for their share due to their faith in the company. Being a shareholder is voluntary and is not permanent and so I wonder what the cap is on what sort of shareholders will be making such a vote on such an important aspect of the business structure of a company.
China takes on big risks in its push for shale gas
http://www.nytimes.com/2014/04/12/business/international/china-takes-on-big-risks-in-its-push-for-shale-gas.html?ref=international&_r=0
China is tapping into the shale gas that their natural environment have. This being so the Chinese government policies are not preventing large scale digging which is three times more that United States regulation. There are safety concerns revolving around this issue being that the state owned companies are allowed to dig deeper. The government will be using small villages to build high rises that will house the workers for fracking. In theory, this will increase the aggregate supply in the long run resulting in economic growth which will improve standards of living per capita. However, there are environmental concerns that will greatly affect people in certain areas.
China is tapping into the shale gas that their natural environment have. This being so the Chinese government policies are not preventing large scale digging which is three times more that United States regulation. There are safety concerns revolving around this issue being that the state owned companies are allowed to dig deeper. The government will be using small villages to build high rises that will house the workers for fracking. In theory, this will increase the aggregate supply in the long run resulting in economic growth which will improve standards of living per capita. However, there are environmental concerns that will greatly affect people in certain areas.
Friday, April 11, 2014
JPMorgan Profit Falls 19% on trading Mortage Declines
http://www.bloomberg.com/news/2014-04-11/jpmorgan-profit-falls-19-on-trading-mortgage-declines.html
JPMorgan Chase & Co, the largest bank in the US, experienced a 19% drop in fixed income trading and mortgages during their first quarter of 2014. Net income dropped from 6.53 billion to 5.27 billion. Net income from consumer and commuting banking declined by 25%. Also revenue was 10% less than the previous year. They faced loses in almost every department. As profit decreases, the interest rate rises. In result, JPMorgan has seen a decrease in investment. As one of their top executives, Blythe Masters, leaves the company, it will be interesting to see if their numbers will improve in the next quarter.
JPMorgan Chase & Co, the largest bank in the US, experienced a 19% drop in fixed income trading and mortgages during their first quarter of 2014. Net income dropped from 6.53 billion to 5.27 billion. Net income from consumer and commuting banking declined by 25%. Also revenue was 10% less than the previous year. They faced loses in almost every department. As profit decreases, the interest rate rises. In result, JPMorgan has seen a decrease in investment. As one of their top executives, Blythe Masters, leaves the company, it will be interesting to see if their numbers will improve in the next quarter.
Thursday, April 10, 2014
Sign of Spring on Pay: Real Wage Growth
http://www.nytimes.com/2014/04/05/business/economy/sign-of-spring-for-pay-real-wage-growth-in-some-places.html?ref=economy
There are signs that the real wage is growing, indicating an improvement in the economy. After inflation, there was .8 percent growth last year, 1 percent growth this year, and a predicted 1.1 percent growth in 2015 according to Mark Zandi of Moody's. This is very encouraging. In some industries the rate of wage growth has been very dramatic such as home construction, where the wage has increased 20-25 percent. Hopefully this economic growth can keep up.
There are signs that the real wage is growing, indicating an improvement in the economy. After inflation, there was .8 percent growth last year, 1 percent growth this year, and a predicted 1.1 percent growth in 2015 according to Mark Zandi of Moody's. This is very encouraging. In some industries the rate of wage growth has been very dramatic such as home construction, where the wage has increased 20-25 percent. Hopefully this economic growth can keep up.
Nigeria's GDP Significantly Increases
The statistician general of Nigeria, Yemi Kale, claims the Nigeria GDP in 2013 rose from 42.4 trillion naire to 80.4 trillion naire ($510 billion), which is approximately an 89% increase. A lot of economists believe the first number may have been fiddled, but that the 2nd number is correct.
Implications of this mean that Nigeria has climbed to the highest sub-saharan economy, moving past South Africa who had approximately $350 million GDP in 2013. Nigerian statisticians improved their gathering and calculations of GDP. For example, the old GDP in Nigeria was solely based on output. Now, this country has added in spending and income as well, increase the GDP exponentially.
This number may seem misleading, to show as if the economy grew, when in reality, they just added in other components that GDP contains. The economy probably didn't grow too much, but due to the extreme adjustment of GDP, it looks as if it had.
Nigeria also increased their sample size of firms from 85,000 to approximately 850,000, including a lot of small firms. The numbers actually show that Nigeria's economy has grown manufacturing from less than 2% to 7% of GDP. Film-making never showed up as a category of Nigeria's GDP, but it is now at 1.4%.
Although this GDP seems impressive, Nigerians aren't richer than they were before at all. The majority of the 170 million residents in the country survive on less than $1.25 a day. Most of Nigeria is just an oil enclave, being 14% of GDP. However, the service industry is booming.
http://www.economist.com/news/finance-and-economics/21600734-revised-figures-show-nigeria-africas-largest-economy-step-change
Implications of this mean that Nigeria has climbed to the highest sub-saharan economy, moving past South Africa who had approximately $350 million GDP in 2013. Nigerian statisticians improved their gathering and calculations of GDP. For example, the old GDP in Nigeria was solely based on output. Now, this country has added in spending and income as well, increase the GDP exponentially.
This number may seem misleading, to show as if the economy grew, when in reality, they just added in other components that GDP contains. The economy probably didn't grow too much, but due to the extreme adjustment of GDP, it looks as if it had.
Nigeria also increased their sample size of firms from 85,000 to approximately 850,000, including a lot of small firms. The numbers actually show that Nigeria's economy has grown manufacturing from less than 2% to 7% of GDP. Film-making never showed up as a category of Nigeria's GDP, but it is now at 1.4%.
Although this GDP seems impressive, Nigerians aren't richer than they were before at all. The majority of the 170 million residents in the country survive on less than $1.25 a day. Most of Nigeria is just an oil enclave, being 14% of GDP. However, the service industry is booming.
http://www.economist.com/news/finance-and-economics/21600734-revised-figures-show-nigeria-africas-largest-economy-step-change
Unemployment Increment
http://www.reuters.com/article/2014/04/10/us-usa-economy-idUSBREA390UQ20140410
The unemployment level measured in April 4th, 2014, is as high as May 2007, which was the lowest amount in the past seven years. State unemployment benefits declined 32000 to a seasonally adjusted 300000. Assumption of the reasons are such as severe weather and stocks that were from the second half of 2013 were accumulated but not sold as much, thus making businesses order less from manufacturers. Moreover the growth slowed down as well, since long term unemployment benefits got expired. The number of people receiving unemployment benefits reduced, starting from 2008.
Job growth was an average of 195000 per month but unemployment was around 6.7 percent, nearly a five-year low rate. However inflation pressures seem to have no effect on unemployment. The price increase was barely 1 percent.
The unemployment level measured in April 4th, 2014, is as high as May 2007, which was the lowest amount in the past seven years. State unemployment benefits declined 32000 to a seasonally adjusted 300000. Assumption of the reasons are such as severe weather and stocks that were from the second half of 2013 were accumulated but not sold as much, thus making businesses order less from manufacturers. Moreover the growth slowed down as well, since long term unemployment benefits got expired. The number of people receiving unemployment benefits reduced, starting from 2008.
Job growth was an average of 195000 per month but unemployment was around 6.7 percent, nearly a five-year low rate. However inflation pressures seem to have no effect on unemployment. The price increase was barely 1 percent.
Family Dollar Makes Moves
In an effort to increase their profits, Family Dollar is making moves. The discount store will cut prices and jobs, and close stores that are not performing well enough. Profit decreased by 35% between quarters, and sales fell 3.8%. Despite not competing well with stores like Dollar Tree, Family Dollar increased prices which ultimately is what led to such significant decreases in profit and sales. With over eight thousand stores in the US, 370 of them will be closed. Following these closings, the firm will begin a slow expansion of about 400 stores next year. Family Dollar is hoping that this expansion will bring them up to par with their competitors.
http://www.cnbc.com/id/101572250
http://www.cnbc.com/id/101572250
Wednesday, April 9, 2014
Climate Panel Sees Global Warming Impacts on All Continents, Worse to Come
http://dotearth.blogs.nytimes.com/2014/03/30/climate-panel-sees-global-warming-impacts-on-all-continents-worse-to-come/?_php=true&_type=blogs&_r=0
Global warming is becoming an issue of increasing importance as it has altered the environment and natural resources that are used daily to produce goods. Global warming continues to change animal migration patterns, precipitation patterns, and crop yields. Although global warming has only accounted for small number of animal extinctions, many species are moving from their natural habitat and are reproducing in different quantities. Crop yields for the most part are negatively impacted in lower latitude regions (where most crops are grown). These disruptions to food production and water supply act as a supply shock. Economies across the world have to deal with extreme weather conditions that negatively impact their output, which in the short run causes the prices of those goods to increase. These shocks to food production across the world show that ecosystems across the world are very delicate and are extremely vulnerable to climate-related changes.
Global warming is becoming an issue of increasing importance as it has altered the environment and natural resources that are used daily to produce goods. Global warming continues to change animal migration patterns, precipitation patterns, and crop yields. Although global warming has only accounted for small number of animal extinctions, many species are moving from their natural habitat and are reproducing in different quantities. Crop yields for the most part are negatively impacted in lower latitude regions (where most crops are grown). These disruptions to food production and water supply act as a supply shock. Economies across the world have to deal with extreme weather conditions that negatively impact their output, which in the short run causes the prices of those goods to increase. These shocks to food production across the world show that ecosystems across the world are very delicate and are extremely vulnerable to climate-related changes.
Higher education: Is college worth it?
This
article from The Economist looks at a recent study conducted
by PayScale, a research firm, which collected data from graduates of over 900
universities and colleges on their degree and earnings. The results of the
study are consistent with much of the recent rhetoric; the return on investment
for higher education is less than the return on the decision to forgo college,
unless you study a lucrative field or attend one of the best universities.
Prestigious universities like UVA, Georgia Tech, and Harvard have average
annual returns after 20 years of over 15 per cent, whereas schools like
Fayetteville State University and Shaw University have double-digit, negative,
average annual returns after 20 years.
By the way, OWU ranks 191 with an annual ROI of 5.7% (8%
with aid) and Denison ranks 565 with an annual ROI of 4.6% (6.8% with aid).
The job market is still tough
http://money.cnn.com/2014/03/31/news/economy/janet-yellen-raise/index.html?iid=SF_E_River
The central bank hopes help "Main street" not just "Wall street" by boosting job market firstly. "In some ways, the job market is tougher now than in any recession." Said by Federal Reserve Chair Janet Yellen on Monday. She listed six signs to explain why does she think the job market is still weak. First of all, the average of 2% per year rising rate of wage is too slowly. Secondly, the Long-term unemployment is high. Thirdly, too many workers are doing part-time jobs rather than full-time jobs. Then employers didn't create a lot of new jobs and some people are leaving their position. Last but not least, the labor participation rate is still low.
All these signs shows that the job market is not good as we imagine although the economy is recovering. The government needs to offer more new jobs and increase labor participation rate, which can make unemployment rate fall and increase the output.
Tuesday, April 8, 2014
Energy Investment Increment
http://cleantechnica.com/2014/04/05/china-1-renewable-energy-investment-us-2-japan-3-chart/
Lots of countries are investing in Solar power, since it is considered as a practical source of electricity, after fossil fuel.
China is investing in a massive amount in installation of solar panels, ranking number 1 in renewable energy investment. The United States got the second place and Japan right behind them. Surprisingly America is behind China in investment of renewable energy. Moreover we could view that China is planning to boost their economy in various ways: Recently China announced the increased pace of railroad construction and reducing the taxes of small firms. At this rate, China might have a great increase in economy growth rate after 2~4 years. Moreover China would probably create a more cleansed environment over time. Quantitatively China is putting way more effort than any other country. The difference in investment between China (#1) and The United States (#2) is more than $10 billion. America also is a massive producer of industrial pollution and one of the largest energy consuming nations, thus an additional investment is required. Fossil fuels are depleting and it is time for every country to consider an establishment of system of renewable energy production.
Lots of countries are investing in Solar power, since it is considered as a practical source of electricity, after fossil fuel.
China is investing in a massive amount in installation of solar panels, ranking number 1 in renewable energy investment. The United States got the second place and Japan right behind them. Surprisingly America is behind China in investment of renewable energy. Moreover we could view that China is planning to boost their economy in various ways: Recently China announced the increased pace of railroad construction and reducing the taxes of small firms. At this rate, China might have a great increase in economy growth rate after 2~4 years. Moreover China would probably create a more cleansed environment over time. Quantitatively China is putting way more effort than any other country. The difference in investment between China (#1) and The United States (#2) is more than $10 billion. America also is a massive producer of industrial pollution and one of the largest energy consuming nations, thus an additional investment is required. Fossil fuels are depleting and it is time for every country to consider an establishment of system of renewable energy production.
Monday, April 7, 2014
Business and Government: The new age of crony capitalism
As the regime of former Ukrainian president Viktor Yanukovych collapsed, protestors were found outside of One Hyde Park (which is a luxurious development in west London). These people were targeting the Ukraine's richest man known as Rinat Akhmetov, they chanted "discipline your pet".
The problematic state of the Ukraine has long been dominated by oligarchs. These wealthy individuals engage in a practice known as "rent seeking". Economists refer to this as a special type of money making which is made possible through political connections. This practice can range from outright graft to discourage competition, intentional lack of business regulation and transfers of public assets to firms at below market prices. Some people have made fortunes through this practice. This system reached its climax in America in the late 19th century. Antitrust rules broke monopolies apart such as John D. Rockefeller's Standard Oil. Since then the flow of bribes to senators in America has substantially shrank.
Although rent seeking isn't much of an issue anymore in the United States, it however still is in other countries. Turkey's prime minister has been engulfed with scandals involving construction firms, millions of Turks want him to be incriminated. India has also experienced capitalist corruption as well. Last year 182,000 public officials were punished for discipline and legal violations, which was an increase of 40,000 from 2011.
Even though capitalism based on rent seeking is unfair, it more importantly is bad for long term growth. Resources aren't properly allocated which leads to poor infrastructure, which is the case in India. Competition is also repressed, which can result in the overpricing of goods. Mexicans pay far above the market price for cell phones.
In my opinion, I think that governments need to be more diligent in regulating monopolies. They should promote honest competition and ensure that public asset sales are transparent. What would you do to prevent rent seeking?
http://www.economist.com/news/leaders/21598996-political-connections-have-made-many-people-hugely-rich-recent-years-crony-capitalism-may
The problematic state of the Ukraine has long been dominated by oligarchs. These wealthy individuals engage in a practice known as "rent seeking". Economists refer to this as a special type of money making which is made possible through political connections. This practice can range from outright graft to discourage competition, intentional lack of business regulation and transfers of public assets to firms at below market prices. Some people have made fortunes through this practice. This system reached its climax in America in the late 19th century. Antitrust rules broke monopolies apart such as John D. Rockefeller's Standard Oil. Since then the flow of bribes to senators in America has substantially shrank.
Although rent seeking isn't much of an issue anymore in the United States, it however still is in other countries. Turkey's prime minister has been engulfed with scandals involving construction firms, millions of Turks want him to be incriminated. India has also experienced capitalist corruption as well. Last year 182,000 public officials were punished for discipline and legal violations, which was an increase of 40,000 from 2011.
Even though capitalism based on rent seeking is unfair, it more importantly is bad for long term growth. Resources aren't properly allocated which leads to poor infrastructure, which is the case in India. Competition is also repressed, which can result in the overpricing of goods. Mexicans pay far above the market price for cell phones.
In my opinion, I think that governments need to be more diligent in regulating monopolies. They should promote honest competition and ensure that public asset sales are transparent. What would you do to prevent rent seeking?
http://www.economist.com/news/leaders/21598996-political-connections-have-made-many-people-hugely-rich-recent-years-crony-capitalism-may
The Decline of Foreign Investment in South Africa
http://www.economist.com/news/middle-east-and-africa/21600176-some-recent-business-bills-pander-populists-deterring-foreign-investors-why?fsrc=scn/tw/te/bl/ed/whyinvest
Two separate mining bills were constructed by the South African Parliament that are expected to decrease foreign investment into the country. In class we recognized that foreign investment is critical for the expansion and growth of a countries economy as a whole. As foreign investors continue to invest less into South Africa the growth and expansion of the South African economy is unknown. The decline in foreign investors is due to a clause in the bill that will allow the government of South Africa to purchase an additional 20% stake in the petroleum venture at an agreed price. This causes investors and businesses to re-think and re-evaluate investing into this venture. If the venture is profitable, it will pay off for the South African economy and the government will be granted more control.
Many problems are being raised in South Africa because of bill changes taking effect. Security guards have more then doubled because of an increase in ownership into security firms. G4S and ADT are two British security firms that have had direct relations with South Africa. These bill changes are pushing these two firms away to create a sense of nationalism. South Africa's president decided not to attend the European Union-Africa summit in Brussels to try to send a message that South Africa is tired of foreign influences. The main objectives of these bills is to weaken property rights, reduce private sector control by displaying right of self government, and hurt investor confidence.
http://www.economist.com/news/middle-east-and-africa/21600176-some-recent-business-bills-pander-populists-deterring-foreign-investors-why?fsrc=scn/tw/te/bl/ed/whyinvest
Two separate mining bills were constructed by the South African Parliament that are expected to decrease foreign investment into the country. In class we recognized that foreign investment is critical for the expansion and growth of a countries economy as a whole. As foreign investors continue to invest less into South Africa the growth and expansion of the South African economy is unknown. The decline in foreign investors is due to a clause in the bill that will allow the government of South Africa to purchase an additional 20% stake in the petroleum venture at an agreed price. This causes investors and businesses to re-think and re-evaluate investing into this venture. If the venture is profitable, it will pay off for the South African economy and the government will be granted more control.
Many problems are being raised in South Africa because of bill changes taking effect. Security guards have more then doubled because of an increase in ownership into security firms. G4S and ADT are two British security firms that have had direct relations with South Africa. These bill changes are pushing these two firms away to create a sense of nationalism. South Africa's president decided not to attend the European Union-Africa summit in Brussels to try to send a message that South Africa is tired of foreign influences. The main objectives of these bills is to weaken property rights, reduce private sector control by displaying right of self government, and hurt investor confidence.
Sunday, April 6, 2014
Chinese tourists boost U.S. businesses
http://money.cnn.com/2014/04/01/smallbusiness/chinese-tourists/index.html?iid=HP_River
With the development of
globalization, the whole world is becoming smaller and smaller.
People would like to spend their time traveling abroad with
improvement of life quality, especially Chinese people. According to
the U.S. Commerce Department, there were almost 1.5 million
tourists visiting United States in 2012. Comparing to under
400,000 visitors in 2007, it is a huge jump. These tourists spent
almost $9 billion in the United States in 2012.
Needless to say, rich
Chinese boost U.S. business. Shopping is the biggest activity they
enjoy. In particular, they would like to spend a lot of money on
luxury. Not only the luxurious bags, dresses, jewelry but
also houses.
Venezuela tackles food shortage with ID card system
The articles states, "Rigid currency controls and a shortage of US dollars make it increasingly difficult for Venezuelans to find imported basic products such as milk, flour, toilet paper and cooking oil."
What do you think? Will this work?
Connecticut Raises minimum wage to gradual $10.10/ per hour
the democrats are touting it as a victory, republicans everywhere are absolutely heaving. Connecticut became the first state that is going to be adopting president Obamas proposed $10.10 hourly minimum wage. They will not do this all at once however and will do it in steps. however by 2017 the state hopes to have had the minimum wage gradually increased to this point. There are two ways to look at this minimum wage in terms of economic (and ironically political consequences). The first being that according to a democrat, this is good news. they feel the wage increase will not only put more money into an employees pocket but it will also result in employees spending that increased disposable income back into the economy. This will result in economic growth. The model may be a bit more complicated than that but that is essentially what the democrats feel is going to happen. However, the republicans feel that this minimum wage increase is going to not only increase unemployment, it will inevitably result in increases business costs. Businesses that they feel may be affected by this wage are mainly small businesses and the service sector which make up a critical crux of the economy. this will thus result in economic downturn. The fact of the matter is that economic theory is something that I feel has never encountered a situation like this. I feel as if in the short run, we may see some downturn in economic growth as the state gets used to increased costs but in the long run as the amount of money that flows from minimum wage workers into the economy is increased, we may see some economic benefits. At the end of the day, the true consequences of the minimum wage hike can only be seen in the long run and not until the middle of the 2020s will we truly be able to judge whether or not the policy has worked or not.
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