December 4 , 2014
Chicago hikes minimum wage to $13 by Linda Ollivier
Chicago increased the minimum wage to $13 an hour by 2019. The increase will be steady and it will go slowly increasing so it will not affect the economy in any other manner. By July 2015, the minimum wage will already be $10 an hour and it will keep slowly growing until $13 an hour by 2019. Mayor Rahm Emanuel backed the increase and it had an unbelievable support by 44-5 votes. This increase in wages will help the consumer with expenses giving people a 410,000 bump in pay, and lift 70,000 workers out of poverty. But Chicago is not the only city that want to increase minimum wages, San Francisco agreed in November to raise minimum wages to $15 an hour by the end of 2018, Seattle approved to increase the minimum wages to $15 by 2021 , and Oakland increase it $12.25 an hour. There other states that are interested on doing the same for the following year, but have not given any digits of how much minimum wages are going to increase.
This article relates with the real wages rigidity discussed in Macroeconomic Theory class. The reason why states do not change the minimum wage from one day to another is the fact that that can affect the economy in different ways and move the labor demand and labor supply out of balance. The rule of 70 calculates how much it takes for prices to double, while the rule of 72 calculates how much it takes for income to double. Prices always double first than income, that is a reason why economists raise wages at a slowly pace. There are reasons for real wages rigidity, legal and institutional factors keep wages high, such as minimum wage, social and geographic, changes are occurring in some cities across the country and not in the whole nation. Turnover cost, and efficiency ages.