Seattle Minimum Wage Essay

Length: 3 pages Sources: 3 Subject: Careers Type: Essay Paper: #44471048 Related Topics: Microeconomics, Supply And Demand, Tourism, Standard Of Living
Excerpt from Essay :

Microeconomics

In 2014, Seattle instituted a minimum wage of $15, which will be phased in over the coming couple of years (Burtless, 2014). Other cities, including Chicago and Philadelphia, are aiming to follow suit with sharp increases in their own minimum wages (Dardick & Garcia, 2014). These increases are expected to increase the standard of living among the working poor in these jurisdictions. While popular ideas with low-income workers, these plans have generally not been met with much enthusiasm by business groups (Worstall, 2014). These policies can be examined from both a macroeconomic perspective (effects on unemployment, GDP and poverty rates) and from a microeconomic perspective. This paper will focus on the latter.

The first concept is basic supply and demand. A simplistic version of supply and demand is typically utilized to argue against a $15 minimum wage. In this understanding, when the cost of labor increases, demand for labor decreases. This immediately creates concerns that employers affected in the city will be at competitive disadvantage to those in nearby suburbs with lower costs of labor. The result will be that such employers will move, thereby creating a decline in employment, or will cut back their operations, in either case creating a decrease in demand (Burtless, 2014).

The problem with this argument...

...

If today a city is in a state of equilibrium with labor demand and supply, but tomorrow the city institutes a sharply higher minimum wage, it is true that demand will decrease. But supply will increase. Low-income workers will all want to work in the city, where they can earn the higher minimum wage. The jobs lost aren't market failure, they are a shift towards a new equilibrium point.

This is where it gets interesting. Labor moves more easily than industry. Thus, workers can come into the suburbs to seek out the high wage jobs, but in many cases employers cannot relocate. There are high costs associated with relocation. Many affected workers are in service industry jobs -- fast food, hotels, etc. Those are jobs that cannot be relocated, because the supply has to locate where the demand is. The hotels in downtown Seattle are not going to pack up for Spokane just because the minimum wage went up. So the demand is much stickier than the supply. The net effect is that many businesses will have to maintain their employment levels, but will have a better selection of workers from which to choose. They can skim the cream of workers in their field, because all workers in the metro area will want to work for the $15/hr wage.

In some businesses, the higher costs will need to be passed along to the customers. In wealthier neighborhoods, the residents can absorb the costs, especially since the inflationary effects of the wage policy are going to be phased in over the course of several years. Price elasticity of demand for basic goods is fairly low -- at least for minor price increases -- among wealthy residents. At worst, there will be some degree of wealth transfer from the wealthier residents to the less wealthy. In poorer neighborhoods, prices will also have to increase, but…

Sources Used in Documents:

References

Burtless, G. (2014). Seattle's minimum wage is now $15/hr: Is that a good idea? Brookings Institute. Retrieved December 1, 2014 from http://www.brookings.edu/blogs/up-front/posts/2014/06/09-seattle-15-minimum-wage-good-idea-burtless

Dardick, H. & Garcia, M. (2014). Illinois, Chicago could be on track for separate minimum wages. Chicago Tribune. Retrieved December 1, 2014 from http://www.chicagotribune.com/news/local/politics/ct-chicago-city-council-minimum-wage-met-1202-20141201-story.html

Worstall, T. (2014). A $15 minimum wage would be a $17,500 tax on jobs. Forbes. Retrieved December 1, 2014 from http://www.forbes.com/sites/timworstall/2014/09/06/a-15-an-hour-minimum-wage-would-be-a-17500-a-year-tax-on-jobs/


Cite this Document:

"Seattle Minimum Wage" (2014, December 02) Retrieved January 23, 2022, from
https://www.paperdue.com/essay/seattle-minimum-wage-2154468

"Seattle Minimum Wage" 02 December 2014. Web.23 January. 2022. <
https://www.paperdue.com/essay/seattle-minimum-wage-2154468>

"Seattle Minimum Wage", 02 December 2014, Accessed.23 January. 2022,
https://www.paperdue.com/essay/seattle-minimum-wage-2154468

Related Documents
Minimum Wage Increase Benefits
Words: 2008 Length: 7 Pages Topic: Business Paper #: 93060046

Beginning wage increases in industry sectors and on a smaller scale in businesses and organizations can have a beneficial effect on various parties. Businesses believe minimum wage increases may hurt them regarding profit, local economy, and potential health effects. While assumptions exist regarding these key issues, research suggests wage increases provide upticks in profit for companies, promote a positive work environment and less stress for employees, and there is minimal

Raising Minimum Wage
Words: 1677 Length: 5 Pages Topic: Business Paper #: 43390661

Executive Summary Purpose and method of this report The base salary at Regal Potomac Yard 16 is one of the lowest in the surrounding area. Although minimum wage differs from business to business, the $8.00/hour should be raised to $10.00/hour. Often businesses are afraid to increase minimum wages. They believe it could have a negative impact on the local economy and could result in lower profits. However, research demonstrates raising the minimum

Raising the Minimum Wage
Words: 661 Length: 2 Pages Topic: Careers Paper #: 48098574

LA Minimum Wage The author of this report has been asked to assess the Los Angeles minimum wage case study. Indeed, it would seem that Los Angeles is trying to raise their minimum wage to a shade above fifteen dollars an hour. They are basically trying to follow in the footsteps of Seattle, who just started doing precisely the same thing. However, Los Angeles is very different from Seattle in terms

Raising the Minimum Wage
Words: 2504 Length: 8 Pages Topic: Economics Paper #: 80712262

Public Policy of the Minimum Wage Public Policy on minimum wage in the United States has shifted focus in recent years. Many in the public and in the White House have sought to raise the national minimum wage to $15 per hour. This is what many find to be a decent living wage that may help those in poverty or near poverty. The past has seen introduction of the minimum wage

Seattle Homelessness Action Plan
Words: 4345 Length: 14 Pages Topic: Accounting / Finance Paper #: 38745397

Action Plan: Getting Homeless Families with Children and Homeless Single Women off the Streets of Seattle Part A 1. Executive Summary 1.0. Overview The problem of homeless in Seattle is likely to continue growing if no serious long-term interventions are instituted especially when it comes to enabling people to not only find, but also keep housing. Towards this end, there is need for a deliberate plan that seeks to find and highlight the appropriate

Compensation I Am Designing the Package for
Words: 731 Length: 2 Pages Topic: Careers Paper #: 83880134

Compensation I am designing the package for a retailing organization in the Seattle. The BLS website highlights the total compensation costs for the Seattle Metropolitan area. Wages and salaries are the largest component of total compensation costs, and these advanced 1.7%, which mirrors the degree to which total compensation costs advanced nationwide over the same period (BLS.gov, 2014). In the West region, average wage and salary amounts to $22.10 per hour