Social Welfare

CASE ANALYSIS: SOCIAL WELFARE

The New York Times newspaper shares with us the decision of the Los Angeles’s city council to raise the minimum wage in the city up to $15 per hour by 2020. The city of Los Angeles is the largest, and one of the most expensive cities of the United States. Being the most populous city as well, it contains a huge labor force of which almost 50% earn less than $15 per hour. It comes out that almost half of the workforce is underpaid and therefore cannot benefit of the same living privileges as the other half. Thus, an increase in the minimum wage would be welcomed in order to improve the living conditions of the population. Although increasing the minimum wage would not affect the living standards of the middle-class, it will definitely be an advantage to the working class people. Indeed, an important part of that working class who was having hard times meeting their basic needs and living expenses will be more able to support themselves and their families. They will rely less on government support and financial aids. Another advantage can be seen on the city and even the country economy. Higher income means higher consumption. Thus, people receiving higher wages will spend more and contribute to the development of the economy. However, every policy having a downside, it is relevant to mention that lifting minimum wage is not without some disadvantages. Indeed, such a decision could create chaos in enterprises because older workers would be likely to ask for a salary increase as well. Moreover, the labor demand could decrease as a result of businesses decreasing their budgets. Personally, I don’t believe that $9/hour is enough for a worker to survive in a city like Los Angeles. An increase in the minimum wage would be a great benefit to workers but this increase should be adjusted between $9 and $15 to avoid negative consequences and hurt some businesses or investments.