Minimum Wage Inclination

Source: CNBC

Article Link: http://www.cnbc.com/2015/07/23/the-15-minimum-wage-fight-notches-higher.html

Author: Heesun Wee

Date: 7-23-15

The issue discussed in this article is New York’s inclination towards increasing the minimum wage to $15 an hour. Soon, The New York Wage Board will complete a testimonial to New York’s work administrator. While the article doesn’t advocate for or against wages, it does inquire about the future: Who will be the next governor to take a risk and utilize his or her power to increase minimum wages?

The supporting evidence for this issue consists of the history of government authority over wages. The New York Wage Board’s sudden move places the issue on a broader, nationwide spectrum. Not only is New York impact, but so are the other few states with comparable government authority over wages. Other states under public eye in regards to the issue include California (with a current wage of $9 an hour), Massachusetts (currently $9 an hour), and New Jersey (currently 8.38) an hour. Such wage hikes clearly impact the economy. Proponents claim it will positively affect our economic standing by subsiding income equality; however, opponents maintain that owners of small businesses will face the brunt of New York’s ignorant actions. The article reveals how wages are a huge determining factor in our economic standing due to their impact on small businesses, low-income earners, employment, and nearly every economic aspect of society.

Wage fluctuation is a very controversial topic due to how it can affect different people of incomparable statuses, either immensely or not at all. Take inflation, for instance. Restaurants, with staff who make minimum wage, could have middle-income customers. If minimum wage was to increase, restaurant owners might be inclined to raise their prices to balance out a loss in profits. However, an increase in prices would result in less clientele. In order to maintain business, owners would inevitably need to feel the burden of increased wages. Thus, inflation wouldn’t be heavily affected. On the other hand, a hike in minimum wage would correspondingly raise the purchasing power of formerly low-income workers. More consumer spending would stimulate economic bustle and boost GDP  (gross domestic product). The overarching impact this would have on inflation is reliant on whether or not increased income would lead to a universal (all product) demand increase.

Another split debate is how wage increases would affect unemployment. Proponents of a hike in minimum wages would argue that unemployment wouldn’t be negatively impacted due to how much increased purchasing power will increase demand and profit, thus, making more jobs available. Others argue that if it costs businesses more to hire employees, then owners would favor one worker that can perform many tasks as opposed to multiple people only capable of a single duty. Again, it all comes down to how higher incomes will influence spending.

In general, a hike in wages is a very heated topic, and I believe it’s one that will be an everlasting debate due to how it will impact those of different classes. New York may not be alone in its desire to raise minimum wage to $15 an hour, for other states have equivalent government power. I feel as though this decision really validates the authority of state governors’. Without the fear of legislation hampering their aspirations of change, governors can truly alter this issue as they see fit. With the upcoming presidential election of 2016, I see the already scrutinized issue has been brought directly to the forefront of America’s political landscape. Bernie Sanders, a presidential candidate, has been very blunt about his wish to raise the federal minimum wage. I agree that minimum wage should be increased in order to help elevate many from a life of poverty.

Golden State Drought Causes

Source: CNBC

Article Link: http://www.cnbc.com/2015/07/09/revenue-loss-due-to-california-drought-to-top-1-billion.html

Author: Heesun Wee

Date: 7-9-2015

 The issue discussed in this article is how California’s current, seemingly endless, drought is negatively impacting revenue and agricultural employment. About 564,000 acres of farmland will soon be vegetated to amassing moisture. Of course, the inevitable result of less agricultural production will be income losses and staggering unemployment figures. While the article doesn’t argue for a direct action that must be taken to change the fate of California, it does sympathize with the farm industry in such a hard time.

 The supporting evidence for this article consists of various numerical estimations in regards to the losses that will be felt by those dependent on agricultural output. A loss in farm earnings is estimated to be a minimum of $1.8 billion and a loss of jobs, 8,550. The economic impact of drought also carries over to those who are indirectly involved with the farming business, such as flatbed drivers. Profit losses across the state could total up to $2.7 billion with 18,600 less employment opportunities. Usable principal crops that formerly accumulated to 4,000,000 acres now only total to 900,000. An enforced 25% less water consumption rule helps to portray the severity of the issue. Outwardly stated, are claims of how this issue will affect the economy: through profit losses, increased unemployment, and an overall downward trend of the agricultural industry.

 Drought has a direct and indirect impact on economic aspects of life because all agricultural sectors are dependent on groundwater for sustainment, and currently, groundwater replacement isn’t countering the amount being used. The direct influence drought has on the economy is readily observed. This includes less agricultural output and less fertile land. The indirect impact of drought is stimulated by the direct impact. This entails reduced income, unemployment, and less tax earnings. While the United State’s unemployment percentage has been able to remain steady, this huge devastation could cause future numbers to skyrocket. Farm owners have tough decisions to make in regards to their workforce. Those who work with land-owners by supplying them with goods will also face unemployment when they receive less business. When billions of dollars are being lost, something has got to give.

 Inflation can also result from this drought. In order to offset water shortages, less acreage for principal crops, and higher costs for production, farm owners may raise their prices. Depending on how long it takes for climate change to affect crop production, hikes in prices may not be seen for a while; however, repercussions will definitely be felt one way or another. Price increases can correspondingly raise the consumer price index and give us quantitative data on inflation rates. 

 These upcoming months are shaping up to be disastrous for California. The huge issue of drought acts like a chain reaction and destroys everything in the agriculture industry. Drought leads to fallowed land, which decreases production, leading to a loss in revenue and, lastly, unemployment. The imbalance of groundwater replenished versus groundwater used by farmers only worsens the fate of specific areas of agriculture. I’m hoping that the severity of this issue will open America’s eyes to how necessary water conservation efforts are. Even the smallest attempts can push California through such a tough time. Climate is such an uncontrollable thing, though. I for myself have witnessed it fluctuate within moments, but this drought doesn’t seem to be disappearing anytime soon. 

Sinking Stocks from Oil Meltdown

Source: CNN

Article link: http://money.cnn.com/2015/08/19/investing/stocks-oil-markets-dow/index.html?iid=SF_LN

Author: Matt Egan

Date: 08-19-15

The issue discussed in this article is precipitating oil prices and how this contributes to plummeting energy-affiliated stock prices. Economic downturn can be indicated by oil prices that are below $40 per barrel, and the United States continues to inch closer and closer to that number. The article argues that while falling oil prices are beneficial to consumers, they shape panic amongst investors. Which shows that if Federal Reserve legislators implement higher rates, the economy may have the stage set for a correction.

The supporting evidence in this article includes the many statistics that reveal a detrimental drop in prices. The Dow Jones Industrial Average concluded on August 19, 2015, tumbling down about 160 points. Both The Standard & Poor 500 and The Nasdaq ended that same day with an almost 1% decrease. While the quantitative data may not seem drastic now, in the future, it will accumulate into something unable to be overcome. The article explicitly points out ways in which the issue of oil prices will affect the economy: imbalance of supply-and-demand, inflation impeding rate increases, and the perpetual issue of unemployment.

Supply-and-demand and inflation heavily contribute to an increasingly diminishing economy. Global demand remains lethargic, while oversupply becomes more problematic. A possible interest rate hike could be the basis for an economic turn-around; however, low inflation is making Federal policymakers wary of doing so. The United States is coming close to the point of improvement, in which rates could be raised due to slowly increasing inflation, but Federal officials don’t want to make any untimely moves. That would only quicken the economic downward trend.

Tumbling oil prices are will also only worsen the immensely apparent issue of unemployment. Inexpensive oil prices for consumers means less profit for producers, which would also contribute to an economic slowdown. This could result in future layoffs or less employment opportunities, increasing unemployment.

The issue of oil prices and the stock market reaches far beyond national borders but still largely affects Federal policymakers’ lack of desire to raise rates. For instance, China’s currency had a drastic drop recently. Many Latin American countries have also been struck with plunging oil prices. This could cause higher demand and interest on loans but an inability to obtain them and other monetary resources, which would have major repercussions. If the Federal Reserve were to raise rates, those investing in newly formed markets would be likely shift their funds to the more appealing American dollar. Other countries that have gathered immense international currency stock could be able to run deficits for quite some time. However, economic chaos in European and Latin American Countries and China is creating a very instable future.

In conclusion, oil prices are constantly fluctuating, and while American consumers love the sight of decreasing gas prices, I believe it will negatively impact the United States in the future. I think it will guarantee sky-rocketing unemployment rates and an unmaintainable supply and demand issue. If we don’t put some thought into how global demand can pick up and balance out oversupply, then the issue will become too much to handle. Soon oil will become less than $40 a barrel, and the economy will spiral out of control. A shift in one market will directly impact another market, despite distances apart. I think the risk is worth it because we need a solution to the economic turmoil very quickly. Oil could continue to rapidly lose its value, and rate increases could restore the stock market to its former health.