Annotated Bibliography

Central Question: Would Obama raising the Federal minimum wage improve or hurt the economy?

Source #1: 

"Texas A&M University: Raising the Minimum Wage Will Hurt Job Creation, Say Researchers at Texas A." India Banking News 4 Mar. 2013. Infotrac Newsstand. Web. 12 Mar. 2013.

This is an article written by someone who is strongly opposed to the idea of raising the minimum wage. He begins by referencing President Obama's SOTU address and more specifically his called plan to raise the Federal minimum wage from $7.25/hour up to $9/hour. Based on research, increases in minimum wage tend to reduce job creation substancially and employee turnover is rather unaffected. He also makes the point that firing people itself is a very expensive thing to do if you plan on replacing them with new employees when training and other factors are taken into account.

"When something costs more, people purchase less of it. Low-skill labor is no different." Increasing how much you pay someone passes those costs onto consumers, thus causing demand to go down.

The information provided in the article gives a good look into the perspective of somebody who is strongly opposed to Obama's proposed increase to minimum wage. It is a great asset to have when trying to answer the question of what raising the minimum wage would do to the economy because he makes a lot of good points and provides evidence to support what he says. The author also cites many other people who share his view, giving his piece an extra dimension.

Source #2:

Hassett, Kevin A. "The wages of gamesmanship." National Review 25 Mar. 2013: 8.General OneFile. Web. 20 Mar. 2013.

The majority of Americans support a higher minimum wage because they believe it will support the lower class and help working citizens. Obama talks about full-time worker benefits while failing to mention the economic and social issues that go along with having a high minimum wage or just a minimum wage in general. In 2012, almost two-thirds of workers making the minimum wage or less were part-time workers, and a bit over half of all minimum-wage-or-lower workers were under the age of 25, many of them students living at home with their parents (Hassett). In the end, the most affected denomination of people affected by the minimum wage is those who lose their jobs because of it.

This particular article is very valuable because it provides many statistics that back up the author's points. He cites information from many Universities, government institutions, as well as economists. The author is clearly another critic of the minimum wage in America, so there is bias present in the article, which is a slight drawback, but he is able to back his points with factual information. I will mostly use the statistics and facts that he points out to strengthen my own argument.

Source #3: Ford, Stephen. "MinimumWage.com." MinimumWagecom. Employment Policies Institute,

Higher costs of employment mean that the employers themselves must pass those costs onto consumers or cut costs elsewhere. San Francisco currently has the highest minimum wage at $10.55 an hour. Research suggests that raising the minimum wage does not help lower poverty rates. The majority of employees who stay at a job for more than a year are above minimum wage by that time. A higher minimum wage reduces the output in many different industries. About 40% of people earning minimum wage are teens or young adults living with their parents.

This source is also packed with factual information and statistics, very vital to answering my question. So far, the information I have gathered is very anti-minimum wage. The source, I believe is pretty credible. I should probably take a look at different perspectives to come to a solid answer.

Demand Wrap Up

Part I.

1. Utility - The satisfaction received from a product; the need or want that a good or service satisfies.

The utility that I receive from drinking water is that it quenches my thirst and keeps me alive.

2. Complementary Demand - When the demand of one product is generally tied to the demand of another, and vice versa.

Hot dogs and hot dog buns have complementary demand because you usually don't use one without the other.

3. Substitute Demand - An instance in which one product can be replaced by another with similar qualities and that falls under the same product category.

Coca Cola and Pepsi have substitute demand for one another.

4. Elastic Demand - When a certain product has a varying demand. 

The demand for cookies is very elastic, when prices go up, people tend to buy less.

5. Inelastic Demand - When a certain product does not have drastic changes in demand despite it's price. 

Gas has very inelastic demand, people tend to purchase the same amount despite it's price.

Part II.
Elastic

Inelastic

The Factors in the Demand Environment

Increase in Demand - Substitutes

http://www.harpercollege.edu/mhealy/eco212i/lectures/s&d/s&d.htm

The blue line represents demand before the increase in price, the red line shows the increase in quantity demand. I chose to use substitutes as the factor in the demand environment. Substitutes affect demand by offering consumers a product that is similar to the original, but at a different price, usually without any noticable change difference in quality. One example of this would be replacing a name brand of bread, such as Sara Lee for a store brand like Fred Meyer. The store brand is still pretty good, but it costs less. So if Sara Lee ever increased their prices, the demand for it would fall and people would most likely start buying a store brand as an alternative.

Decrease in Demand - Complimentary

http://www.harpercollege.edu/mhealy/eco212i/lectures/s&d/s&d.htm

Complimentary products have the ability to affect demand negatively when there is a significant increase in price of a product's compliment. For example, if prices were to increase on hot dogs, demand would fall not only on hot dogs, but also buns and perhaps some condiments. Relish, would probably be the most affected because it goes best with hot dogs, not really much else. Mustard and ketchup demand would also be affected, showing how an increase to the price of one thing has the ability to affect other products as well.

Demand Headlines

1. Complementary:
"Jean prices at an all-time low, boxer sales soar!"

2. Substitute:
"Gas Prices skyrocket to $100/gallon, bike sales ignite.

3. Elastic:
"Oreo prices go through the roof, sales plummet."

4. Inelastic:
"Milk prices mooooving up, sales unaffected"

Milk is a common commodity that is generally always going to be in demand. People use milk in just about everything, from your cereal in the morning to a glass of the stuff with dinner. Even with all of the substitutes like soy and almond milk, many people tend to stick with the classic milk from a cow, in my opinion, the best. It's inelasticity comes from it's wide range of uses in cooking, baking, and regular consumption. Many people, such as myself, are unable to move onto the new craze of milk substitution.