Source:http://www.cbc.ca/canada/nova-scotia/story/2009/04/01/ns-minimum-wage.html
Summary
In Canada, provincial governments are thinking ways of stimulate the current recession. One of the ways to help the economy is to increase the minimum wage. On April 1st, 2009, Nova Scotia’s minimum- wage earners are getting a raise. The new provincial rate is up to $8.60 per hour. Before the increase, it was $8.10. The provincial government said this will be the first of the three increases in the minimum wage over the course of a year and a half. In the fall of 2010, the minimum wage should be raised to $9.65 per hour. Statistically, the number of people working for minimum wage in Nova Scotia has gone up in the past few years.
Connection
The connection between this article and the textbook is wage control. The minimum wages are controlled by the provincial governments. The increase of wage would encourage people to spend more in this economy. The effect of this would be price ceilings. This would result in shortages in the marketplace. Eventually, the demands for goods and services would increase over time. Thus, the increase of goods and services would help our economy. The minimum wage increase helps the economy’s inflation on prices.
Reflection
Having this increase of minimum wage helps many people cope through this current recession. The two dollars increase helps people with the price inflation in the country. For a university student, the increase means an extra $6 a week from a part-time job at a campus convenience store. This would help the student pay the monthly bus pass which costs $45. However, this wage increase would hurt owners. Since there is a wage hike, there are also increase prices from fresh produce to electricity. This would add burden on the owners to pay a higher wage. I believe this wage increase would help the economy, even though some owners would be affected.
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10 comments:
I think an increase in minimum wage may act as an incentive for people to take up employment, which can bring many benefits to the economy. Though an increase in fifty cents may seem trivial, it can actually encourage more spending in the long run and a multiplier effect could be used to determine its effects on GDP. This would probably have significant benefits on students as many of them are entering the workforce for the first time. The increase in fifty cents can help students cover some living expenses such as bus fare, mentioned in the article. Another aspect of the chapter that could be applied to increased wages would be the inverse relationship between inflation and unemployment. Wage increases would most likely result in higher employment rates, which would trigger a higher inflation rate. Overall, I think the increase in minimum wage was a good decision by the provincial government, especially considering the state the economy is in with the current recession. It may encourage more spending and benefit the GDP levels of the economy.
J.Tam
Block F
Going as far back as Chapter 3 in our textbook, it must be remembered that "a minimum wage is an example of a price floor in the market for workers" (p. 82); I don't see how a minimum wage could be a price ceiling, as you said. Seeing as that underlying point of your argument was incorrect, there might be other parts to your article that make less sense, but the one other thing I'd argue with you about doesn't involve a technical error. Actually, I would debate that wage increases would help people cope in this current recession.
You said that an increase in wage helps people with price inflation in the country. I'm afraid I'd have to disagree with you on that fact. First of all, the essence of inflation is that prices increase to accompany an increase in the money supply. So an increase in wages would either cause - or react to - rising prices, meaning that more money will buy the same amount of product, not more product. Second of all - if you look to the present - you might even see something else happening.
Because we are in a recession, "we" are supposed to be encouraging people to spend. Understandably, certain manufacturers have not wanted to increase their prices in this past year since that would prompt people to spend less. What some manufacturers have been doing instead is selling a smaller quantity of product for the same price. In this scenario, a wage increase would do less than nothing. Overall, more money would buy less product at slightly inflated prices (the change in prices would be negligible so that it could be said the prices didn't change).
It might be difficult to see what I'm getting at. But to clarify my position, I don't believe that the benefits of a wage increase outweigh the negative outcomes, and wage increases should only be implemented in the case of considerable inflation. I say this despite the fact that I have been a part-time member of the Canadian workforce since 2005. I've never been ambitious in my temporary profession. If my employer decides to raise all employee salaries for the next year, I'm fine with that, but I wouldn't attend an union meeting or - heaven forbid - vote to strike.
The wage increase you mention might work in Nova Scotia - and I do wish that province luck - but I've seen flyers cropping up around our city demanding that British Columbians' minimum wage should be raised to $10/hour. I find that quite simply outrageous. To be one of my generation's harshest critics, most "teenagers these days" are too lazy to get jobs. There are plenty of incentives to employment that don't just include money, so if individuals are not willing to work right now, then they don't really deserve to work at any higher rate.
- Krista Wong
Oh god. I broke the Angela Economics record for the longest blog comment (I think).
If Angela wrote an entire blog entry in response to one of mine, once, then what I wrote here on yours is a veritable 5-paragraph essay :O
I wish I could be this productive when writing blogs as opposed to commenting on them.
Yet, by increasing the minimum wage will definitely help the economic crises now; however, it will bring up more and more questions later on. As mentioned in this article, the effect of this would be price ceilings. Price ceilings would eventually result in shortage in the marketplace. The demand for goods and services would increase over time, while suppliers would be reluctant to supply more products to the market. Further changes will be needed to change the situation. In addition, shortages are likely to lead to black-market dealings, in which products are sold illegally for a price above the price ceiling. In shortage situations, the quality of the product could also suffer. If there is a wage and price control and businessmen find their product in great demand, they might cut back on product quality in an attempt to earn more money. Therefore, increasing the minimum wage is not necessary good in the long run.
I believe that with a minimum wage increase, there will be a significant amount of lost jobs and because owners of companies just simply cannot afford to pay for people at that high rate of pay. Although this wage increase may seem good at the beginning, the economy will balance out to what it is now because of inflation. The prices of everything will be jacked up to meet everybodys wages due to supply and demand. The positive side of this is that it might benefit the economy by motivating people to find jobs. Here is the conflict, people are trying to find jobs but owners are decreasing job spots for people. The minimum wage increase may simply not be a good thing for the economy over a long period of time.
Harry Lam
In a sense I agree with your case on how increasing minimum wage would also increase the incentive for consumers to spend. But on the other hand, I believe increasing the minimum wage would actually be bad for both the employee and employer; both sides will suffer. Not only will the employer be paying the employee more for doing the exact same thing as before, but the employee is actually not making too much more. Once minimum wage is raised from $8.10 to $8.60, the inflation rate will gradually increase alongside. Although consumers may take a while to realize this inflation increase, it is happening. It sounds better to be making that extra 50-cents per hour extra, but in reality, when taking into account inflation, the consumer is actually making the same as before. This is where I agree with your argument. Because the employee is physiologically thinking that they’re making more than before, they would be less reluctant on saving the money. Therefore it results in more money being circulated in our economy and ultimately our economy would benefit from this.
K. Li
Blk F
Even though the wage amount increased from 8.10 to 8.60, it is actually not a good thing. I think there would be less job opportunities since the price increase and employers would not have enough to pay for every employee. This would mean the percentage of jobless people would enlarge. I think on the other hand, employees who already have jobs, they would benefit from the increase towards their wages. The increase would help improve this current recession and eventually help improve the economy as well.
k.lau
blk f
What I wonder is why there is all of a sudden this wage increase? Can companies even afford to increase their wages during a recession like now? I agree with Krista’s point on how wage increases should only be implemented if there is a case of considerable inflation. However from what we learned in chapter 6 of our text, the idea of increasing wages can be used to encourage people to spend more money to initiate the flow of money; in a sense I suppose I can agree. Another positive point is that hopefully this can trigger a higher employment rate, and then lead to a higher inflation rate. Personally I don’t mind the wage increase, but if there is no reason why the employee deserves a raise, then I don’t understand why one should be given.
Stephanie Murao
Block F
I think increasing minimal wage would encourage people to look for jobs. There are many 8-dollar jobs out there that many would not take and by increasing the wages, people are going to be more motivated to take it. An increase in jobs would allow an increase in spending which could help the falling economy. I agree with you that an increase in minimal wage would especially help students, as they are mainly ones that are working in the minimal wage range. The small increase can help them a lot in paying for their daily essentials. This does cause the problem of inflation but a certain amount of inflation is not bad for the economy and in fact, it can help improve the economy.
With the increase of minimum wages, hopefully it will stabilize the economy's downfall. Although the wages increase looks like it helps people, it could also hurt them as well. With the wages increase, some businesses cannot afford to keep up with the increase and there might be some job losses. Or since the wages have gone up, businesses will gain more profits and want to keep their profits by hiring fewer employees. This increase of wages also helps by benefiting teenagers when they get the job. The small increases of wages can help pay for the things that they need such as school supplies or for their ways of transportation.
Calvin Wong
Block F
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