Seattle brought in a staged rise to $15 an hour minimum wage, not really considering the downsides. After being in this class for a few weeks, we could already predict the possible outcomes associated with this change. Raising the wage we have learned leads to structural unemployment because there is a mismatch in the skills that workers in the economy can offer and the skills demanded of workers by employers (skills gap). Thus, when there is a higher minimum wage, employers will only want to hire workers with a higher skill set leaving all the workers that don't match the higher skilled wages of $15 unemployed who may have been able to get hired when there was a lower minimum wage having lower skill sets. The author of this article communicated these foreseen events. However, he did disclose that by no means he expected the whole economy in Seattle to crash, but as it did, raise unemployment rates. Since the $15 minimum wage raise went into effect, in only 11 months, the number of people employed in Seattle has dropped by almost 10,000.
http://www.forbes.com/sites/timworstall/2016/02/19/seattles-15-minimum-wage-jobs-down-unemployment-up-this-isnt-working-is-it/#6b6dfb0a3712
I agree that from what we have learned it is not surprising to see an increase in the unemployment rate due to an increased minimum wage. I am curious to see where Seattle's economy goes from here. I wonder if the UR will continue to rise and if so will the city look into lowering the minimum wage. I am curious to see what happens and if this will affect other cities' decisions regarding the minimum wage.
ReplyDeleteI recall that when this news first broke, few seemed to consider the fact that structural unemployment would increase. Seattle, being a particularly liberal city, will have to reply in some way, though decreasing the minimum wage may not be particularly effective. I recall that near over the summer, San Fransisco too raised their minimum wage. It will be interesting to see if their unemployment increases at a similar rate of Seattle's.
ReplyDeleteThat is amazing that 10,000 people have already lost their jobs, but I'm not surprised.
ReplyDeleteI agree with Michael that structural unemployment will certainly increase. Bernie Sanders is strongly in favor of the $15 dollar minimum wage and would implement this policy if he is elected president. Seeing as this policy has not entirely worked in Seattle, Senator Sanders might have to rethink his stance regarding minimum wage.
ReplyDeleteThat's a great point. I definitely think he will probably have to rethink his stance and if not he may possibly lose votes after seeing what has happened in Seattle.
DeleteI can see how unemployment rate has increased from what we have discussed in class. There are times that people, or rather the state government, do not realize what the future consequences are. Yes, there will be a higher minimum wage but then a lot of people will be unemployed.
ReplyDeleteThis raise in minimum wage could be very dangerous if it is implemented throughout the entire country. If in just one city, over 10,000 jobs have been lost, you can only imagine how many jobs would be lost throughout the entire country.
ReplyDeleteThis rise in minimum wage can be explained by the students of econ 110 classes at OWU. I think the real question is, what does the rate have to be to ensure that non-skilled workers can make a livable budget working a reasonable workweek? While the economics of an increase of minimum wages has proven time and time again to increase unemployment. There has to be a happy medium where workers can have a decent standard of living and also minimize structural unemployment. I hope that the future of economics holds the answer to that question.
ReplyDeleteThis rise in minimum wage can be explained by the students of econ 110 classes at OWU. I think the real question is, what does the rate have to be to ensure that non-skilled workers can make a livable budget working a reasonable workweek? While the economics of an increase of minimum wages has proven time and time again to increase unemployment. There has to be a happy medium where workers can have a decent standard of living and also minimize structural unemployment. I hope that the future of economics holds the answer to that question.
ReplyDeleteRaising minimum wage would definitely increase the unemployment rate, because companies do not want to hire an employee who do not worth to pay in even the minimum wage. I wonder that why the Seattle government decided to raise the minimum wage, this will cause 10,000 people unemployed after all.
ReplyDeleteIncreasing the minimum wage to $15 is very risky. We all know that a rise in minimum wage leads to a decrease in unemployment so it is not surprising that 10,000 people lost their jobs.
ReplyDeleteI am sure the state of Seattle would have considered the pros and cons of such an increase in the minimum wage of the state. It has obviously had a backlash meaning firms are hiring lesser workers and may also be laying workers off in order to stay with in their budget that they may have. Rather, this has caused unemployment to rise and may also cause a dip in the people standard of living, may increase government transfer payments with more people being unemployed and may have a very negative effect on the economy of the state of Seattle.
ReplyDeleteThis is no surprise to see, when you raise the minimum wage the affects you are going to see are less people employed. It's crazy to see that so many people have lost their jobs in just 11 months, I wonder how much that will affect the poverty in Seattle?
ReplyDeleteI agree that wage raise is definitely is expected to increase structural unemployment so while the people with jobs may have better pay, the amount of people with jobs will be much fewer as we have already seen.
ReplyDeleteWeird how they didn't consider what would happen with the $15 price floor. But I think it was a good idea to try because many people that wanted the rise in minimum wage can realize that it's not a good idea and it will cost many people their jobs. On the other hand, if people are successful at their job, they might want the raise because people who are really good at their jobs will not be fired, and will have that increase.
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