Economic Policymakers in New York proposes widening of the economy through raising the minimum wage of low-earning workers. However, there exist many criticisms regarding the issue of the minimum wage as some economic thinkers perceive that increasing the minimum wage lead to a reduction in sales, increase in prices and costs thus creating a negative implication on the economy of the state.  The key economic dates in New York which include Rosh Hashanah and Labor Day tend to fall close on the calendar thus giving an opportunity to inspect the issue of federal minimum wage which affects households in New York (Clemens, 711).   According to the journal ‘Minimum Wages and Employment’ published by The American Economic Review, argues that federal minimum wage does not reflect the living wage in New York as the prevailing rate of $7.25 per hour makes a worker make about $15,000 per year.  The household income continues to hover at the poverty level due to financial constraint on families.  In this note, the federal government should increase the minimum wage to stimulate the economy as well as to provide livable income for low-wage workers in New York.

According to the article ‘Why America Needs a $15 Minimum Wage’ published by the Economic Policy Institute,  the existing minimum wage is outdated for being constant for many years. In this case, the minimum wage at $7.25 per hour fails to incorporate the dynamic of markets in New York. Therefore, the article supports the federal government to increase the minimum wage to curb workers strikes across New York.  Also, raising the minimum wage increases standards of living in New York by reducing the inequality gaps that exist between the high-income earners and low-income earners in New York.

The gradual rise of the minimum wage by the federal government can help in solving disequilibrium that exists in the labor market due to an increase in the unemployment rate.  According to the article ‘The Short-run Employment Effects of Minimum Wage’ published by Economic Inquiry, raising the minimum wage by the federal government can reduce the unemployment rate in New York by increasing labor by 26.6%. Therefore, the rise in minimum wage is a practical approach to restoring the historical value of labor in New York as workers regain purchasing power similar to that of different states.

According to a comprehensive study conducted by the American Economic Review, points the advantages of increasing the minimum wage by increasing the gross domestic product of the state by $32.6 billion as well as netting more than 140,000 jobs (David, 58). This approach cannot kill jobs in New York as many conservatives claim but rather is a practical approach towards reducing the widened income gap in New York.   Despite some states increasing the minimum wages locally, the issue remains the mandate of the federal government to achieve equilibrium in the labor market across American states (Cooper, n.pag).

The solution to minimum wage in New York pertains to expanding the existing labor market by offering competitive wages to unskilled and skilled workers in different sectors. In my thinking, this approach is a better option as it helps in increasing productivity as well as reducing unemployment in New York by about 26% (Card, 1397). Also, this solution helps in improving the living standards in the state by empowering the purchasing power of households.

Considering my argument on the issue of minimum wage, the reader can think differently through digging more in-depth on the implication of federal government increasing the minimum wage to other areas such as commodity market due to increase in purchasing power. Also, the reader can think about the implication of the issue of income distribution, turnover reductions of employees and fluctuations in average costs of labor in New York.

Bibliography

Clemens, Jeffrey, and Michael R. Strain. “The Short‐Run Employment Effects of Recent Minimum Wage Changes: Evidence from the American Community Survey.” Contemporary Economic Policy 36, no. 4 (2018): 711-722.

Reich, Michael, Sylvia Allegretto, Ken Jacobs, and Claire Montialoux. “The Effects of a $15 Minimum Wage in New York State.” Institute for Research on Labor and Employment, University of California-Berkeley (2016).

Card, David, and Alan B. Krueger. “Minimum wages and employment: a case study of the fast-food industry in New Jersey and Pennsylvania: reply.” American Economic Review90, no. 5 (2000): 1397-1420.

Allegretto, Sylvia, and David Cooper. “Twenty-three years and still waiting for change.” Economic Policy Institute and the Center on Wage and Employment Dynamics, Institute for Research on Labor and Employment, University of California-Berkeley (2014).

David, H., Alan Manning, and Christopher L. Smith. “The contribution of the minimum wage to US wage inequality over three decades: a reassessment.” American Economic Journal: Applied Economics 8, no. 1 (2016): 58-99.

Cooper, Raising the Federal Minimum Wage, Appendix Table 3; and Bureau of Labor Statistics, Occupational Employment Statistics, May 2016.