fix HW for MBA Master

this homework you did before, I gave it to my Pro and he ask me to answer this questions for the this artical 

You need to answer the following four questions in your report;

1- Who are the people who actually work for minimum wage and who employees minimum wage workers?

2- What are the pro’s of raising minimum wage?

3- What are the con’s of raising minimum wage?

4- What do you thing we should do about minimum wage? Are there any alternatives to help the poor?

Raising the Minimum Wage Won’t Reduce Inequality 


BY CHRISTOS MAKRIDIS
February 5, 2016 New Republic
Walmart is giving more than one million of its
employees a raise later this month as part of a
plan that will lift all but its newest hires to at least
$10 an hour.
The move, first announced last year, follows an
aggressive campaign to get the largest private
employer in the U.S. to lift worker wages and
coincides with a nationwide push to raise federal
and state minimum wages and a prolonged period
of little growth in pay.
While Walmart’s decision is at least in part a
result of that pressure, it’s still the action of a
private company to revamp its own wage policies,
as opposed to the result of a government forcing it
to lift worker pay. Proponents of requiring just
that argue raising the minimum helps reduce
inequality. Critics contend it can actually worsen
it by driving up unemployment and weakening
economy-wide labor market flexibility by raising
the costs firms face.
So what does the economic research say about the
impact of minimum wages on income inequality
and is there a better way to reduce it?
Minimum wage fallacies
Many of the articles in the mainstream press
promoting minimum wages are incompatible with
basic economic principles.
The first fallacy is that changes in the minimum
wage do not affect the behavioral response among
firms and individuals. The second fallacy is that
higher wages will force companies to innovate in
order to reduce costs. Both these arguments
overlook some very basic, but informative,
economic principles.
The first overlooks the fact that wages are
designed to compensate workers for productivity.
When wages are distorted, they affect the profit-

maximizing decisions that businesses make. The
textbook prediction, which is generally supported
in the data, is that higher minimum wages reduce
employment since companies restrict the number
of workers they will hire. These adverse effects
are especially likely given the pace of
technological change and automation.
The second overlooks the fact that there are
effective and ineffective ways to stimulate
innovation among businesses. The idea that
making hiring more costly will spur innovation is
tantamount to requiring companies to reduce the
size of their physical presence so they become
more productive. While these types of distortions
may prompt a small fraction of companies to
innovate, misallocation more generally is a major
factor behind cross-country differences in
productivity.
Minimum wage and inequality
Nonetheless, economists themselves have debated
how minimum wages affect employer decisions
for many years.
In 1994, economists David Card and Alan
Krueger were the first to provide some evidence
that such effects may be small. But more recently,
a consensus has generally emerged that changes
to minimum wages have strong effects on jobs
growth.
How minimum wages affect inequality, however,
remains controversial. Detecting it with standard
statistical methods is very challenging because
their full effects are constantly changing and
require data on both individuals and companies.
Back in 1999, Princeton economist David Lee
used the Consumer Population Survey (CPS)
from 1979 to 1989 to argue that the declining
purchasing power of the minimum wage largely
explains why inequality surged in the 1980s.
Other new research, however, has put that
conclusion in doubt. Perhaps the most conclusive
reassessment comes from economists David
Autor, Alan Manning, and Christopher Smith
earlier this year. Using many more years of
microdata from the CPS, as well as a different
statistical approach, they found that the minimum
wage explains at most 30 percent to 40 percent of
the rise in wage inequality among the lowest
earners.
Since economists had thought that changes in the
minimum wage could explain as much as 90
percent of the shift in inequality, these new
estimates are important.

https://newrepublic.com/authors/christos-makridis

http://www.huffingtonpost.com/entry/walmart-10-raise_us_56a01acde4b0404eb8f03b26

https://hbr.org/2016/01/why-the-u-s-needs-wage-insurance

http://www.huffingtonpost.com/2013/02/13/minimum-wage-productivity_n_2680639.html

http://www.bloombergview.com/articles/2015-11-23/want-to-boost-productivity-raise-minimum-wages

http://www.nber.org/papers/w19262

http://faculty.chicagobooth.edu/chang-tai.hsieh/research/MMTFP

http://davidcard.berkeley.edu/papers/njmin-aer

http://www.wsj.com/articles/the-evidence-is-piling-up-that-higher-minimum-wages-kill-jobs-1450220824

http://www.nber.org/papers/w19262

http://piketty.pse.ens.fr/files/Lee1999

https://www.aeaweb.org/articles.php?doi=10.1257/app.20140073

How wages affect worker behavior
While the extent is still uncertain, it’s clear that
the minimum wage and other wage-setting forces
such as tax rates and union bargaining power do
in fact affect inequality and the labor market.
My own ongoing research, which focuses on the
link between such wage-setting mechanisms and
company behavior, suggests labor-market
distortions like raising the minimum wage can
have other negative effects on workers, businesses
and inequality beyond the overall impact on
employment.
The first adverse effect concerns how much
people work. If, for example, worker wages rise
due to a government mandate, the employer may
reduce the number of hours staff work, leading to
lower paychecks even after the raise. That’s part
of the reason why we’ve seen companies like
McDonald’s increasingly try to automate tasks
that were once held by people.
In addition, my research suggests one of the major
ways people acquire new skills is by spending
more time at work. Thus policies that lead to
fewer hours could lower employees’ ability to
improve their long-run earnings potential.
The second is an indirect effect on the way
businesses invest in workers and design
compensation and organizational policies. When
companies are forced to pay higher wages, they
may offset the cost by reducing how much they
invest in workers. There is evidence that
minimum wage laws have this effect.
This can result in weaker compensation contracts
(e.g., purely salary-based), which provide
employees with fewer incentives to accumulate
skills. As a result, workers paid fixed wages suffer
greater long-run earnings volatility than those
receiving performance-based pay.
Put simply, if a recession comes and an individual
loses his or her job, having more skills makes it
easier to find a new position and return to the
previous income level.
Minimal impact on inequality
Even setting aside all the plausible economic
arguments against the minimum wage, under the
best case scenario, what does it really achieve?
If the average full-time employee works 1,700
hours per year, then moving from $7.25 an hour to
$9 an hour produces only about $2,975 in
additional annual earnings. While some may
argue that something is better than nothing, this
would be at best a marginal solution to inequality.
Taking a look at the most recent 2015 Current
Population Survey data and restrict the sample to

full-time earners with over $10,000 earnings per
year, Americans at the 90th income percentile
(they earn more than 90 percent of their
compatriots, or $80,000 a year) make 5.6 times as
much, on average, as those at the 10th percentile
($14,200). Increasing the minimum wage to $9 an
hour would put the ratio around 4.65.
In other words, even in the best of worlds—where
the minimum wage has no unintended side effects
—it appears to only marginally reduce inequality.
Alternatives to raising the minimum wage
Where does this leave us in trying to reduce
inequality?
First, companies are welcome to raise wages at
any time they want. And letting them do so may
be more effective at reducing inequality than
when they’re forced to because it avoids the
adverse consequences such as reducing hours.
Businesses are well aware of their marginal costs
and benefits—how much it costs to produce an
additional unit of output versus the incremental
gain. When governments set uniform wage
regulations, they require all companies—each
with their own and distinct marginal costs and
benefits—to abide by the same rules. In contrast,
when companies decide to change their own pay
practices—as Walmart is doingthey do so in a
more efficient way.
Second, as Stanford economist John Cochrane has
remarked, instead of addressing the short-term
problem of low wages, governments and
companies can address the more structural
problem: a lack of skills.
Companies and local governments can provide
training programs and support for additional
education, such as through community colleges,
in order to equip workers with additional skills
that translate into meaningful value for their
companies. Investing in worker skills can lead to
increased employee productivity and creativity,
which in turn translates into sustained higher
wages. And these benefits have broad spillover
effects throughout the labor market and make
sustainable gains in narrowing the gap between
the richest and the poorest.
While the economic effects of minimum wage
laws are very complex and a subject of scrutiny
within the economics community, there are much
better ways to deal with systematic challenges in
the labor market. Getting more people to work,
reducing the barriers for businesses to hire and
encouraging the accumulation of new skills are all
strategies for promoting sustainable long-term
growth in wages.

http://piketty.pse.ens.fr/files/Lee1999

http://davidcard.berkeley.edu/papers/union-struct-wage

https://people.stanford.edu/cmakridi

http://www.sole-jole.org/Haepp-Lin

http://www.businessinsider.com/average-annual-hours-worked-for-americans-vs-the-rest-of-the-world-2013-8

http://johnhcochrane.blogspot.com/2013/02/two-cents-on-minimum-wage.html

SUMMARY AND OPINION 1

Summary and opinion

Name

Institution

Summary one page on raising the minimum wage.

The decision that was recently made by the wall mart company to give more than a million of its employee an increase in wages was followed by an aggressive campaigns. There has a national push which had called for an increment in wages to all the workers. However the decision to raise the minimum wage still depends on the company’s decision. These move has actually been received differently by the critics. Some argue that it will lead to increase in inequality. They insist that these increase will lead to unemployment and weaken the economy of the US.

There are a lot of fallacies that are have been associated with these move on the minimum wage. Such as changes in behaviors, secondly companies will be forced to device ways that will reduce the costs of operations. Additionally these factors have distorted the economic principles. Additional these move will lead reduce employment opportunities.

Renown’s scholars such as David Autor and Alan manning argued that increasing the minimum wage will lead to inequality especially to those low income earners. To on theses fact my personal finding reveals that increase in these wages will have a negative effect on workers and employment opportunities. Companies will continue replacing human labor with machines for instance the McDonald’s company.

Contrary to this issue of iminium wages increment various economists such as John Cochrane feel that the government needs to address the short term wages as companies address the structural problems. The government should strive to provide additional skills to workers. This will in turn lead to increase in wages due to creativity that will arise among workers. Getting more people to work will lead to increment in minimum wage as long as the barriers and challenges that are often in the labor market have been removed.

SUMMARY AND OPINION 1

Summary and opinion

Name

Institution

Summary one page on raising the minimum wage.

The decision that was recently made by the wall mart company to give more than a million of its employee an increase in wages was followed by an aggressive campaigns. There has a national push which had called for an increment in wages to all the workers. However the decision to raise the minimum wage still depends on the company’s decision. These move has actually been received differently by the critics. Some argue that it will lead to increase in inequality. They insist that these increase will lead to unemployment and weaken the economy of the US.

There are a lot of fallacies that are have been associated with these move on the minimum wage. Such as changes in behaviors, secondly companies will be forced to device ways that will reduce the costs of operations. Additionally these factors have distorted the economic principles. Additional these move will lead reduce employment opportunities.

Renown’s scholars such as David Autor and Alan manning argued that increasing the minimum wage will lead to inequality especially to those low income earners. To on theses fact my personal finding reveals that increase in these wages will have a negative effect on workers and employment opportunities. Companies will continue replacing human labor with machines for instance the McDonald’s company.

Contrary to this issue of iminium wages increment various economists such as John Cochrane feel that the government needs to address the short term wages as companies address the structural problems. The government should strive to provide additional skills to workers. This will in turn lead to increase in wages due to creativity that will arise among workers. Getting more people to work will lead to increment in minimum wage as long as the barriers and challenges that are often in the labor market have been removed.