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Posts Tagged ‘minimum wage’

Life as a Factory Worker

May 24, 2013 Leave a comment

bf1Do you ever wonder where and who produces your the favorite phone, IPad or computer?  The Foxconn City is a complex of factories that house persons working for them producing Apple, Microsoft, Dell and Hewlett Packard project.  Foxconn Technology Group, who owns the complex of factories, and employs 235,000 workers, has a reputation of tough tactics and sweatshop condition for their workers producing these in demand products. According to the Daily Mail, Apple Corporation uses sweatshop environments to produce the products that are sent to the west. Apple, for example, sold 93 million IPhones, 40 million IPads, 38 million IPods and 17 million computers, yet they are involved with a company that is paying the Chinese workers far below United States minimum wage earning a whopping $1.75 per hour or $273 per month, which would require months of work in order to be able to purchase one the products they make.  Reports have indicated that workers were recorded doing 24 hours shifts at a time, while others were forced to stand up during their entire shift.  These people are producing the phones and apple products that are craved all over the world, while working in a monotonous, tedious, assembly line environment under what looks clean, but horrible conditions.  Many workers have committed suicide because of the harsh conditions in the factories; many factories have been forced to install suicide nets around their facilities.

bf2Even though abuses continue, Apple contends that they have sent 60,000 workers to college for free and have informed one million staff of their legal rights. Chief-executive Tim Cook claims that they are working hard to improve the conditions for workers and are trying to improve the lives of employees. He is working with Foxconn to fix the problems. However, there are still reports of 150 Foxconn employees threatening to leap from the facilities because of poor working conditions and low wages.  Given the rise in Apple stock it seems that something could be done to improve the conditions of the low wages.

A Company’s main goal is to make as large of a profit as possible. These sweatshops are the most efficient way to make large gains. But do the cost outweigh the benefits?  Many major companies like Apple believe in improving the working conditions of their employees.   These companies are only left to wonder whether consumers would be willing to pay a higher price for their product in exchange of knowing these products are being produced the right way.  According to basic economics and the law of demand, if a company raises the price of their product demand will decrease.  When a product price rises, many consumers will be tempted to look at a substitute at a cheaper price, so therefore, when a company raises its price their demand will decrease.

Minimum wage: Raise or Abolish?

April 24, 2013 1 comment

In the passed months , the Obama administration has fought to raise the federal minimum wage above its current level. There are many people who support this and are extremely curious how much longer it will take until it has passed. What has perplexed my interest is what economists have to say about the minimum wage. In my government and economics course we had a brief period discussing over why price floors are destructive to the efficiency of production.

When the government raises price floors. They are intended to increase the money in workers pocketbooks. This in turn gives them more money to be spent elsewhere. Unfortunately, that is not the case, rather than creating a profitable working class it creates one that struggles to find employment. If the price floor is higher than equilibrium, then we find ourselves and excess in supply. Meaning that employers demand less workers because they are at a higher price. In fact, if the Obama administration gets the minimum wage at $9.40, there will be an estimated of 450,000 jobs lost. This will cause a huge hit to our finally stable employment.

Although it is probably best to keep the minimum wage where it is, there are some who want it gone for good. After all, companies are not just competing for customers, but for employees too. If you are a worker, you will go with the company that offers you the best deal. So in a way, the market also affects wages. Just as I mentioned earlier, if the minimum wage increases, you will most likely see unemployment rise. That is a sign that the market wants labor at a lower price. So naturally workers will accept a lower price so he could be employed. This will push the market back to equilibrium, and have the economy operating at maximum efficiency.

Another way to understand the effect of excess in demand is America’s college situation. We have such a large number of graduates seeking to enroll in college, yet they cannot make it because they are not the most qualified. This has caused ACT and SAT scores to rise astronomically. There are now so many students ready for college that there are not enough students to fill their place. With the standard of admittance rising, the lower income families who cant afford to send their kids to fancier schools so they can get a better chance at admittance. All this happened because there were more students ready for college than spots available.

Our economics course really opened my eyes. I understood the fact that government intervention is best when it is as little as possible, but I never understood why. Perhaps the reason why Obama and most of america wants a higher minimum wage is to give a pat on the back to those who work hard and receive little. But what they don’t understand, is that if they really want to help the workers. They should not raise the minimum wage.

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Obama Approval Ratings Soar

February 21, 2013 2 comments

President Barack Obama’s approval rating has just reached a record-setting high when compared with the past three years of his presidency. A Bloomberg poll, conducted nationally, released Wednesday shows that nearly 55% of responders approved Obama’s performance in office (Bloomberg). Since Osama Bin Laden’s death, his approval statistics have been continually rising (Huffington Post). Looking at these facts alone, it would seem that the President is doing an exceptional job as Manager of Prosperity and even Voice of the People. However, these numbers don’t tell the whole story regarding the general sentiment of the American people.

Source: The Stapletonion

First, the Bloomberg poll also reveals that the same percentage, 55%, disapprove of how Obama has handled the federal budget deficit. Without significant changes, this could quickly disintegrate Obama’s perceived success. In order for the President to reverse this majority opinion, federal spending needs to be cut. It is not enough to only raise taxes – the government has a spending problem. If government programs across the board were to cut their budgets by even a small fraction, the multi-trillion dollar deficit we are currently entrenched in would certainly not continue to get to an absurdly out of control amount. If anything, this small reduction in spending will only help our country’s current situation. The fiscal cliff still looms threateningly in the future, and cutting government spending is the only way to ensure that our country’s economy is back on the right track toward a healthy state.

Source: ICIC

Next, the poll states that a mere 49% of Americans approve of how Obama has handled the economy since he was first elected into office. Although ‘handling the economy’ involves many different areas and aspects to consider, focusing on a few major points will portray the overall picture. First, it would be beneficial for Obama to express clearly how he plans to handle a looming recession that could potentially happen due to a fiscal cliff. Deadlines have repeatedly been ignored when it comes to making a final clear-cut compromise regarding this issue.  Postponing the formulation of a concrete plan is only making Americans grow more and more weary. Yes, some tax reformations have been addressed, but another large part of the problem – government spending, has not even been remotely touched on. If Obama wants better ratings and satisfaction from the American people, he must give a direct answer to this problem. Second, Obama may want to spend some additional time considering his recent proposition to increase minimum wage. This sounds good in theory, but more money per person means less total jobs. Unemployment rates have been steadily improving recently, and reversing this trend would not be of great advantage to the president. He could theoretically still raise minimum wage incrementally, but a drastic increase will not be supported by today’s economy.  With these and a few other improvements, Obama’s approval within American society will continue to raise even more than it already has.

In conclusion, Obama has the potential to rally the spirits of the American people to improve the economic state of our economy if he makes careful, rational decisions.  Obama needs to take responsibility of giving the American people the clear answers that they deserve. If he does this, the people of our nation will all be on the same page when it comes to working together as one united whole to enhance the situation that the United States is in.

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