Question

Read the article regarding "Los Angeles City Council Gives Final Approval To $15 Minimum Wage" and answer these questions. How will a higher minimum wage impact the economy? Is this a good idea? Who will benefit from the higher wage and who will lose? When you got your first job were you worth $15?

Case study is given below.

Minimum-wage workers in Los Angeles, the nation's second-largest city, are getting a pay raise.

In a 13-1 vote on Wednesday, Los Angeles County lawmakers approved an ordinance that would raise the current minimum wage from $9 an hour to $15 an hour by 2020. The vote makes LA the largest American city to raise its minimum wage to $15 an hour.

Los Angeles Votes to Increase Minimum Wage | InsideGov

"This is nothing short of historic. Historic for our city. Historic for the economic equality movement. And historic for full-time workers and their families who live on poverty wages, Rusty Hicks, of the Los Angeles County Federation of Labor, said in a statement.

The increase would immediately affect only businesses with more than 25 employees. It will be rolled out in increments of about $1 an hour over five years. Businesses with 25 or fewer employers will have a one-year delay before having to increase wages. As CBS LA reports, the minimum wage will increase to $10.50 beginning in 2016. It will rise to $12 in 2017, $13.25 in 2018 and $14.25 in 2019. It peaks at $15 by 2020. Each wage increase becomes effective in July.

The bill, which received pending approval in May, still needs Mayor Eric Garcetti's signature. The Democratic mayor has previously said he would sign the wage hike.

“With this vote, the minimum wage will no longer be a poverty wage in Los Angeles,” Garcetti said last week. “I want to thank the City Council for joining me in building a city that provides greater opportunity and possibility for all of our residents.”

Opponents of the wage hike argued it would hurt smaller businesses, while others said it might prompt layoffs by pinched employers.

LA becomes the latest success for labor groups representing low-wage workers like fast food, retail and home service employees. San Francisco and Seattle have already raised their minimum wages to $15, while Chicago is moving to raise its workers' wages to $13 an hour.

The efforts are getting support from big-name Democrats, who hope to win workers' votes in 2016. On Sunday, Democratic presidential candidate Hillary Clinton surprised workers gathered in Detroit for convention centered around the Fight For 15 campaign with a phone call voicing her support.

Answer 1

Higher minimum wage will lead to inflation in long term because ofher states will follow the suit and soon national minimum average shall increase from 9dollars to 15 dollars by 2020. This will lead to higher disposable incomes and hence boost aggregate demand and hence will lead to higher GDP Growth as well increase in Imports.

Overall its good idea if coupled with contractionary monetary policy to keep inflation in check.

The biggest losers will be firms because of higher wage outgo. Biggest winners will be unskilled workers who rely on wages.

First job depends on skills and takents and organisational payment standards which determine overall salary outgo.