Prob. 4 chpt. 30 News. on page 677 News: Obama Wants $9.50 Minimum Wage (Crains)

Question

Prob. 4 chpt. 30 News. on page 677
News:
Obama Wants $9.50 Minimum Wage
(Crains)When Barack Obama and his fellow Democrats take power in Washington, DC,
restaurant operators are expecting them to push a minimum wage hike. . . .
Obama wants to boost the federal minimum wage to $9.50 an hour by 2011, up from
$7.25 an hour in 2009. . . .
Minimum Wage
The National Restaurant Association opposes raising the minimum wage, which has gone to
$6.55 this year from $5.15 in 2006, and is scheduled to rise to $7.25 in July.
The association in June conducted a survey of 1,300 members in 18 states that found that
58 percent raised menu prices and 41 percent reduced employee hours because of the higher
minimum wages.
Joe Sabia, an assistant professor of public policy at American University in Washington,
D.C., says that a 10 percent increase in minimum wage reduces retail employment by 1 percent
and reduces employment among young workers by 3.4 percent.
Obamas proposal would raise the federal minimum wage by over 30 percent, causing
even greater job loss at a time when our economy can least afford it, Mr. Sabia contends.
David Sterrett

Question: According to the News on page 677, what percentage of retail jobs would be lost if the
minimum wage were increased to $9.50?

Explanation / Answer

3% is the answer

10:1 ratio

10=minimum wage increase; 1= retail jobs lost

   minimum wage increase= 9.50-7.25/7.25

   minimum wage increase=31%

The minimum wage increased by 31%

Retail job loss equals 1% for every 10% wage increase

10:1=30:3

3 is the answer!

Sounds confusing I hope I wrote it good enough to understand

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