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Supporters ask Michigan voters to OK minimum wage of $9.50. By Tuan Pham Detroit Free Press Feb. 10, 2014 http://www.freep.com/article/20140210/NEWS06/302100061/. The Issue.
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Supporters ask Michigan voters to OK minimum wage of $9.50 By Tuan Pham Detroit Free Press Feb. 10, 2014 http://www.freep.com/article/20140210/NEWS06/302100061/
The Issue • Michigan’s minimum wage could go up to $9.50 an hour if supporters of a ballot proposal get their petition language approved and can collect more than 258,000 signatures • Michigan’s is currently $7.40 an hour • The Raise Michigan coalition, which supports an increased minimum wage, submitted the petition language to the Secretary of State this past Monday
The Plan • The new Michigan wage would be phased in over three years and would be indexed for inflation • It also would raise the wages of tip workers, like waitresses and bartenders who are paid $2.65 per hour at a rate of .85 cents per year until it reaches $9.50 • The group must turn in at least 258,088 valid signatures from Michigan voters by July 7 • If the group reaches the number of signatures then the citizen-initiated legislation would then be turned over to the Legislature. Lawmakers could approve the proposal and it would automatically become law • If lawmakers do nothing or reject the proposal, it would go on the November general election ballot • Last year, three bills calling for an increase in the minimum wage were introduced in the Legislature, but haven’t been giving a hearing
The Problem • The Michigan Chamber of Commerce oppose the issue, saying it will lead to higher prices for goods and the loss of jobs for businesses that cannot afford the higher wage • “If Michigan increases the cost of employing entry-level workers, lower-skilled workers will see less job opportunities because employers will be forced to hire higher-skilled job applicants to fill multiple roles, or cut jobs to absorb the costs associated with the increase,” said Wendy Block, director of Health Policy and Human Resources for the Michigan Chamber of Commerce • The Michigan Restaurant Association also opposes the proposal. • “This government mandated wage hike that completely eliminates the tipped minimum wage will not only increase menu prices and cost Michigan jobs — it will put many restaurants out of business,” said Brian DeBano, Michigan Restaurant Association president and CEO
W1 is the minimum price for labor • W1 is above the equilibrium point W0 and L0 this indicates that the quantity of labor demanded has decreased from L0 to L2 • Because of the increase in wage from W0 to W1, there are more people wanting to enter the labor force • These are the L0 and L1 people • The entire group of L1 to L2 will be unemployed • People at L2 only enjoy higher wages
Economics • The higher the minimum wage is above the equilibrium wage, the higher the unemployment • The increase in minimum wage will cause the demand for labor to fall (it is less profitable for a firm to employ more workers) • Increase in minimum wage rises the supply of labor (People are more attracted back into work) • Even though many minimum wage workers would highly benefit from the increase in their pay, this may also cause employers to illegally higher workers below the minimum wage or hire illegal workers (e.g. migrants) for their cheap labor.
