New York Rings in the New Year With a Pay Bump for Minimum-Wage Workers

EconEye Admin

3 years ago

The minimum wage rose to $16 in New York City and in the rest of the state the new minimum wage is $15. This recent pay bump is part of an agreement made last year between the Governor and the state Legislature, over the objections of some employers.—apnews.com

Answer the following questions to check your understanding of the story.

Who gains from the rise in the minimum wage?

a) Workers who earn the minimum wage and who keep their jobs.

b) The governor and employers who are willing to pay the minimum wage.

c) All low-skilled workers.

d) People who are entering the labor force.

Wrong! - What happens in a labor market that pays minimum wage when the minimum wage rises? Who gains and who loses?

That's Right! - Some workers might lose their jobs when the minimum wage rises, so only the workers who earn the minimum wage and who keep their jobs gain.

What do you anticipate will happen in the labor market where workers earn the minimum wage?

a) The quantity of labor demanded decreases, the quantity of labor supplied increases, and unemployment rises.

b) The supply of labor increases, the demand for labor decreases, and unemployment rises.

c) The supply of labor increases with no change in demand, and unemployment rises.

d) Incentivized by a higher wage rate, workers become more productive, so the demand for their labor increases with no change in the supply. Unemployment doesn’t change.

Wrong! - How does a rise in the minimum wage change the quantity of labor demanded and the quantity of labor supplied?

Well Done! - Raising the minimum wage decreases the quantity of labor demanded, increases the quantity of labor supplied, and creates a surplus of labor. Unemployment increases.

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