The Ineffectiveness of Raising Minimum Wage - Evan Ritchie

The Ineffectiveness of Raising Minimum Wage

By: Evan Ritchie

For several years now, a large population of workers in the US have been fighting for an increase in the minimum wage. The general consensus of low wage workers is that they would like to see a rise to $15 per hour. Currently, some states are beginning to take action. California has made the boldest move thus far as the first to officially approve a plan to increase minimum wage to $15 by 2022. New York is following these actions fast by requiring large food franchises to pay workers at least $15 per hour. Many people believe that an increase in minimum wage will help bring a large amount of citizens out of poverty. This type of increase would indeed be extremely significant as “40% of all [US] workers earn less than $15 an hour,” reports Ahiza Garcia of CNN. That is a huge percentage which means immediate impacts will be very extreme. When we look at the short run the impacts are very positive and promote growth of the economy. Due to the greatly increased incomes of such a large portion of the country there will be a major increase or positive shift in aggregate demand. People have more money and are now willing and able to buy more of the goods and services they want and need. This will also result in an increases in the Real Gross Domestic Product because the quantity being sold is increasing but price level is staying the same. However, basic economics tells us that a change in the consumer's income also affects how businesses change their prices. This being said, it can be expected that all prices of goods and services, in the states with increased wages, will also increase at the same rate. Another action business will be prone to take is cutting jobs. If cost of employing low wage workers goes up by 60%, it can be expected that roughly 60% of those workers may lose their jobs. This bears the question of whether or not it is an effective strategy to increase wage as a means to bring people out of poverty.

In conclusion, it is important to think in terms of both the long and short run when making impactful economic changes. There are clear positives and negatives to increasing the minimum wage -- some come right away and others occur over time.

Works Cited

Garcia, Ahiza, and Jeanne Sahai. "What You Need to Know about the Minimum Wage." CNNMoney. Cable News Network, 1 Apr. 2016. Web. 12 Apr. 2016.

Sahadi, Jeanne, Jackie Wattles, and Chris Isidore. "California Is First State to Approve $15 Minimum Wage." CNNMoney. Cable News Network, 1 Apr. 2016. Web. 12 Apr. 2016.

Sahadi, Jeanne. "New York Seals Deal on $15 Minimum Fast-food Wage." CNNMoney. Cable News Network, 11 Sept. 2015. Web. 12 Apr. 2016.

Disney's Monopoly over Entertainment

Gabe Hall

Mrs. Straub

AP Economics

12 April 2016

Disney’s Monopoly Over Entertainment

How often do you think of Mickey Mouse when you’re watching ESPN? How often do you think of Elsa or Olaf when watching a Harry Potter Weekend Event on ABC Family (now Freeform)? Did you ever think of Cinderella’s Castle when watching the epic lightsaber battle between Rey and Kylo Ren in “The Force Awakens”?  Well, after reading this, you may never be able to perceive your favorite cinematic universes and television shows the same way again. With Marvel’s “Captain America: Civil War” coming to theaters on May 6th of this year, and “Rogue One” coming later in 2016, I have decided to delve into the empire of Disney Entertainment, and make the argument that they truly have a monopoly over the world of entertainment.

The Walt Disney Company started in 1923 in the rear of a small office in Los Angeles. It was there that Walt Disney, and his brother Roy, produced a series of short live-action/animated films collectively called the Alice Comedies. The rent was a mere $10 a month. In 1937, Disney’s innovative first full length animated feature, Snow White and the Seven Dwarfs, was released to critical acclaim and worldwide success, and the rest was history. A little less than a century later, the Walt Disney Company is currently worth north of $75 billion. How did this miniscule company rise to become one of the top companies in the world? Some may argue that it is because of their parks and resorts. Granted, attractions such as Disney World and Disney Cruises are the second most profitable aspect of The Walt Disney Company. However, this is not what sets them apart. Companies such as Universal and Carnival are in competition with Disney, thus this sector of Disney’s business exists within an oligopoly - a state of very limited competition. What sets them apart is their true dominance in entertainment.

The Walt Disney Company began as animators, creating feature films such as the Hunchback of Notre Dame, The Little Mermaid, and Aladdin, but have since grown to dominate both the television and silver screen markets. In 1984, ABC acquired ESPN. When the Walt Disney Company acquired the American Broadcast Company’s parent company Capital Cities Communications in 1995, both ABC and ESPN became a subsidiary of Disney. This move by Disney allowed them to not only control ABC and its subchannels, but also to control the cornerstone of sports broadcasting, thus beginning their monopoly over entertainment. The television market may seem like a monopolistic competition, but as Disney continues to acquire more and more production companies - such as A&E Networks - their dominance over the entire market will continue to grow as well. Disney, while continuing to diversify itself in television, turned to movies to expand its portfolio. In 2006, Disney made its first big move, by acquiring Steve Jobs’ Pixar at a valuation of $7.4 billion. Although this may seem like a large, and risky investment, with many potential opportunity costs. Disney Pixar has since created many Academy Award winning animated films such as Up and Inside Out, with every film being a raging success at the box office.  The Walt Disney Company furthered its reach and control on the entertainment market, by making one of the most lucrative deals in the history of the company, by purchasing Marvel Entertainment in 2009 for $4 billion. Since then, the Marvel Comic based films - including the highly successful Marvel Cinematic Universe -  have generated an incredible $8.5 billion. Disney and Marvel have found a way to make even the most obscure heroes have critical and financial success at the box office (i.e. Guardians of the Galaxy). Finally, Disney’s latest move may prove to be the final nail in their monopoly over the world entertainment market. In 2012, Disney purchased Lucasfilm, the company with the rights to Star Wars, for $4.05 billion. Already, Disney is seeing a return on their investment, as “Star Wars: The Force Awakens” has made over two billion dollars at the box office - with more films to come. Although companies such as Fox, Sony, and Warner Bros are also in the market, they do not have the entertainment ‘forces’ that Disney has. Thus, through the acquisitions of companies such as ABC, ESPN, Pixar, Marvel, and Lucasfilm, and the creation of others (such as the Disney Channel), have established Disney’s monopoly over entertainment.

The monopoly that the Walt Disney Company has over the market of entertainment is astounding. Entertainment alone contributes to over half of its yearly revenue - roughly $28 billion. Sure, Disney entertainment does not necessarily have a monopoly in the true sense of the word -

it is not a single producer in the market - but with their increased presence and increased success, their control of the market will only become stronger. If they keep creating films at the level of “Star Wars”, and more than likely of “Captain America: Civil War”, the demand for these movies will continue to increase at an indeterminable rate with the supply of the movies, and the monopoly (I honestly wouldn’t be surprised if they one day acquire Hasbro, and actually own Monopoly) that Disney has over entertainment will grow in power and in profitability. Thus, I contend that the conglomerate of Walt Disney Company has a monopoly over the entertainment business.

Works Cited

"DISNEY's $4 Billion Marvel Buy: Was It Worth It?" Newsarama.com. Web. 12 Apr. 2016.

Nudelman, Mike. "Here's Where Disney Really Makes Money." Business Insider. Business Insider, Inc, 14 Jan. 2015. Web. 12 Apr. 2016.

"The Walt Disney Studios - History." The Walt Disney Studios - History. Web. 12 Apr. 2016.

The Launch of the Tesla Model 3 - Brennan Zimmer

Brennan Zimmer

Mr. Kramer

AP Economics - Insight

8 April 2016

The Launch of the Tesla Model 3

It’s very likely that you’ve heard of the company Tesla and their all electric cars, but you probably don’t see too many of them on the roads. This may have to do with the fact that Tesla is a relatively young company and that its vehicles are more expensive than many other cars. Tesla’s have usually started in at about $80,000; until just two weeks ago. With this being said, many people in the past couldn’t afford such a car, but with the newly release Model 3, Tesla has made a more affordable car to the masses. To be put into more detail, below will discuss what a potential car buyer should expect from the Model 3 in its performance, costs of each Tesla model, and the effects of the Model 3’s sales has on the United States economy.

With the MSRP of $35,000, what should customers expect from Tesla’s Model 3? Likely one would expect features close to other previous models as a respected electric luxury vehicle manufacturer. In response to customer desires, this is exactly what Tesla accomplished. According to Teslamotors.com, it states that the Model 3 will have “215 miles to the charge, go from zero to sixty in less than six seconds, seat five adults, and have autopilot hardware”. Other models such as the Model S and X have very close features, though slightly upgraded over the Model 3 due their higher prices. In a nutshell, Tesla is providing its Model 3 customers with everything the average consumer would want, and more when comparing to other automobile manufacturers.

Next, when it comes purchasing a car, price is generally one of the most important details that needs to be kept into consideration. If a car buyer was looking to purchase a Tesla, they would need about $35,000 which would put them in the category of the new Tesla Model 3 as Tesla’s cheapest car option. After the Tesla Model 3 comes Tesla’s Model S, with a starting price just under $80,000 that can cost as much as $108,000. The last and final model that will be mentioned is the Model X which also starts at about $80,000 and goes up to approximately $115,500 says autoguide.com. Thanks to the Model 3, more Tesla enthusiasts will now be able to own a Tesla.

With the Model 3 being released about two weeks ago, there has already been thousands of reservation orders on the car. To be more exact, there has so far been about “350,000” ordered and the demand is growing (Barnes). These sales are equivalent to “14 billion” in gross sales (Moscaritolo). In order to fulfill these orders, Tesla has over 13,000 employees within the United States states rgj.com. Addionally rgj.com also shows, Telsa economic impact could be almost two billion dollars. This is made up of “6,500 direct factory employees, and 3,000 construction jobs” (Damon). Without doubt, Tesla and the Model 3 are helping the economy while keeping its workers within its United States factories.

In the end, Tesla's Model 3 has become more affordable, while meeting/exceeding its customer's demands and having a positive economic role by ultimately increasing the United States GDP. Tesla has started to build a very good reputation within the automobile industry which was once only covered will traditional gas run vehicles. In Tesla’s small amount of time in business, it has almost made a monopoly in electric automobiles. From the results of the Model 3, it is safe to say that Tesla will be here to stay in the automobile industry and if Tesla numbers continue to grow, it's sure to have a bright future ahead of itself.

Works Cited

Barnes, Noah. “Tesla (TSLA) Model 3 Achieves 325K Reservations in a Week.” Quadrangle Online. Quadrangle Online. 10 Apr. 2016. Web. 10 Apr. 2016.

“2016 Tesla Cars.” AutoGuide.com. VerticalScope Inc. n.d. Web. 8 Apr. 2016.

Moscaritolo, Angela.”Tesla Model 3 Sales: Not Too Shabby.” PC. PC Mag Digital Group, 8 Apr. 2016. Web. 8 Apr. 2016.

Damon, Anjeanette. “Tesla's economic impact for Nevada could be $1.9 billion.” Reno Ganzette-Journal. USA Today Network. 5 Sep. 2014. Web. 8 Apr. 2016.

“Model 3.” Tesla. Tesla Motors. N.d. Web. 8 Apr. 2016.

“Model S.” Tesla. Tesla Motors. N.d. Web. 8 Apr. 2016.

“Model X.” Tesla. Tesla Motors. N.d. Web. 8 Apr. 2016.

Is Pacific Sunwear Going Out of Business? - Kate Previte

Kate Previte

Mrs. Straub

AP Economics

Insight

08 April 2016

Is Pacific Sunwear Going Out of Business?

We all have our favorite places to shop. Whether it comes to buying clothes, food, or other items, we all have our preferences. While this may be true, what are you supposed to do when your favorite clothing store goes out of business? That is what is currently happening to me, and I’m sure many of you, as Pacific Sunwear, otherwise known as PacSun, files for bankruptcy as we speak.

Since the 2008 recession, households in the U.S. are not taking in nearly as much income as they were prior. Although there was a peak in 2013, it still does not make up for the deficit. When a recession occurs, aggregate demand decreases, due to the money supply decrease. In more relatable words, a recession leaves the average family with much less money to spend on luxury stores, such as PacSun, leaving those stores with a decrease in demand for their items. As you can see in figure 1 below, prior to the 2008 recession, real median household income in the U.S. had peaked at around $57,500 annually. Following the recession, the income as of 2014 had only gotten back up to about $53,750 annually. While that is an improvement, that is an average of $3,750 less per household each year. That loss of income affects higher priced items- such as clothes at PacSun, the most, leading them to have to file for bankruptcy.

Figure 1.Graph showing annual real median household income as of 2014 in the U.S. (The Economic Collapse).

Snyder, Michael. “Real Median Household Income – Federal Reserve.” The Economic Collapse. The Economic Collapse, Web. 22 Nov. 2015. 08 Apr. 2016.

Although the store has not yet filed for bankruptcy, according to an article published by The New York Times, they are not the only ones affected by the recession. “PacSun joins a string of retailers that have filed for bankruptcy over the last year, including American Apparel and Quiksilver, as the industry struggles to keep up with changing consumer tastes and a shift to shopping online” (Tabuchi), (see figure 2). While filing for bankruptcy may sound detrimental to some, the store could save itself by doing so. By filing, PacSun will be “under a debt-for-equity restructuring agreement, the company plans to be taken private by Golden Gate Capital” (Tabuchi). Since they are being taken private by Golden Gate Capital, this means that, “[The deal will] convert more than 65 percent of its debt into equity and receive at least $20 million in new capital from the private equity firm Golden Gate, the retailer said in a statement” (Tabuchi). By filing for chapter 11 bankruptcy, the store has the option to either decrease its number of stores, or renegotiate the rent that they pay for their space in shopping malls (Tabuchi).

Figure 2. Picture displaying that American Apparel has gone bankrupt. (Fashionating World).

“American Apparel Claims Bankruptcy Not a Deterrent to Its Future.” Fashionating World. FashionatingWorld, Web. 16 Oct. 2015. 08 Apr. 2016.

Pacific Sunwear as of right now, will “continue to operate [its 601 stores] without interruption to customers, employees or vendors” (Tabuchi). This may be true as of right now, but what is to happen in the future for the store that we all know and love? The only thing we can do as of right now is wait and see what will happen. What do you think will happen to PacSun?

Works Cited:

“American Apparel Claims Bankruptcy Not a Deterrent to Its Future.” Fashionating World. FashionatingWorld, Web. 16 Oct. 2015. 08 Apr. 2016.

Snyder, Michael. “Real Median Household Income – Federal Reserve.” The Economic Collapse. The Economic Collapse, Web. 22 Nov. 2015. 08 Apr. 2016.

Tabuchi, Hiroko. “Pacific Sunwear Files for Bankruptcy.” The New York Times. The New York Times Company, Web. 07 Apr. 2016. 08 Apr. 2016.

The Economics of Elections - Evan Hoffins

Evan Hoffins

Mrs. Straub

AP Economics

5 April 2016

The Economics of Elections

With presidential primaries underway, most Americans have been thinking hard about their favorite candidates and who they want to represent our country as the next President. While it is easy to get caught up in the politics, debates, issues, and promises that these candidates publicize, many people forget about the economic impacts of the massive presidential elections that occur every four years.

The funds raised by politicians each election are massive, and possibly much greater than most realize. In the last election in 2012, the total money spent was more than 6.2 billion dollars, an impressive figure considering how the 2008 election raked in around 5.2 billion and the 2004 election a cool 4 billion (“Money Behind..”). If this trend continues, this year’s election will cost around 7 billion dollars!

So what happens with all that money? A good portion of it is spent on campaign promotions like commercials, radio advertisements, and mailed flyers or posters, while some of it is simply spent on campaign expenses such as staff members’ salaries or flights to and from campaign cities (Curry). All of these forms of spending campaign money are beneficial to supporting the economy. Commercials and radio advertisements provide a source of income for media companies both big and small, stimulating both local economies and big corporations and increasing the aggregate demand of the economy. Similarly, the printing industry sees greater demand for posters and printing opportunities, and so do airlines in charge of transporting campaign staff and other public volunteers to various events on the campaign trail. Because of the election, millions of dollars are spent toward wages for campaign staff that are kept employed by the election. It is reported that Hillary Clinton spent over 20% of her campaign funds on staff payroll alone (McLaughlin par. 1).

It is also important to note, however, that not all of the money being donated to campaigns is being utilized for what we expect. A good sum of money is actually just being saved by candidates in a sort-of “reserve” that is only used in case it is absolutely needed. This amount saved can be anywhere between 50 to 100 million dollars (Curry). This saving has the potential to be harmful to the economy, depending on what the candidates do with it. If the candidates simply save the money by some sort of private means, and not deposit it in a bank, then the money is simply taken out of active circulation, and does so at the cost of those supporters who contributed the funds to the cause. However, if the money is deposited into a bank account, then that bank can lend that money out as loans and further contribute to the welfare of the economy by increasing the money supply due to the multiplier effect.

For most of us, these details do not affect our voting decision, but considering that many citizens are financial contributors to their political parties, it may be enlightening to further understand where their donation money is really going.

Works Cited

Curry, Tom. "Where Does All That Campaign Money Go?" Msnbc.com. 2007. Web. 03 Apr. 2016.

McLaughlin, Seth. "History Is Repeating Itself: Hillary Blows through Millions to Pay Massive Staff." Washington Times. The Washington Times. Web. 03 Apr. 2016.

"The Money Behind the Elections." Opensecrets RSS. Web. 03 Apr. 2016.

Poll Booths. 2016. Web. 3 Apr. 2016. <http://mynewsla.com/wp-content/uploads/2014/11/16-9-Poll-booth.jpg>.

Sea World - Sydney Wagner

Sydney Wagner

Mrs. Straub

AP Economics

5 April 2016

Seaworld

Seaworld is known for its unique marine life and exciting events that show the animals and trainers performing amazing stunts. But after relentless criticism about how they treat their animals, Seaworld announced that they will end orca breeding inside of their parks. Among the mixed reactions “animal activists were delighted, while it disappointed many marine scientists, who say they will gradually lose vital opportunities to learn things that could help killer ha;es in the wild” (Kay). As the current population of whales in the park remains constant, biologists are rushing to collect and analyze enough data.

(Kay)

As for the park, ticket sales have decreased ever since the documentary entitled “Blackfish,” which questions the orca care and focuses around the death of a trainer during a performance in Orlando. The decrease in spending in the parks results in a decrease in revenue. With dwindling revenue and the whale population, most past customers are turning to other parks or staying home. In Florida, most turn to the Disney parks or Universal to make up for the amusement they got when visiting Seaworld. This fact allows the other parks to increase their ticket sales and develop repeating customers for future sales. For others, staying home allows them to save money for future endeavours.  This could lead to an increase in spending within their home towns, or an increase in investments. The extra spending money gives the consumers more spending power to decide where their money goes.

Although the new announcement has questioned the fate of Seaworld, animal activists and competitors are benefiting at the expense of the marine park. If the ticket sales continue to decrease, the employment of the park will begin to decrease while price levels increase in order to keep up with the expenses. This will eventually lead to an increase in the unemployment for the states that house a Seaworld park. As the employees look for new jobs they will be experiencing frictional unemployment. As this develops, the demand for careers in marine biology will increase in the states while the supply decreases.

Many families will take their vacations to new destinations but Seaworld is still holding on. In captivity orcas can live to be well over 50 years and the parks currently have half of their whales that are younger than 20 years.This means that the shows and research will continue until the final whales pass away in their cages. For many, the whale shows will become more and more special and the trainers will begin to appreciate their jobs knowing that an expiration date has now been put in place.

Works Cited

Kay, Jennifer. “Scientists bemoan SeaWorld decisions to stop breeding orcas.” The San Diego Union-Tribune. The San Diego Union-Tribune, 2016. Web. 4 Apr. 2016.