April 26, 2019 Critical Thinking

1. The graphic includes the recent United States Federal Deficits by year. In 2018, the budget federal deficit was $779 billion. However, according to the graph, the debt raised by $1250 billion this year. Individuals naturally assume that the annual Deficit is the total that the federal government borrows each year. Actually this is not so. The Deficit is solely the distinction between Federal Outlays and Federal Receipts. If the government spends more than it takes in, then it runs a deficit. If the government takes in additional than it spends, it runs a surplus. Usually, the Federal debt increases each year by more than the official Deficit. For 2019, the federal budget estimates that the federal debt will increase about $1.24 trillion.

2. The reason why I choose this article is because every year, the government spends money on various programs, such as National Defense, Social Security, and Healthcare. Historically, periods with spikes in deficits and corresponding increases in the national debt have been in the 20th century when World War I and World War II were happening. Deficits are not any longer caused by periodic spikes in wartime spending, but rather by a long-term, structural mismatch between spending and revenue.  By addressing this situation, policymakers can put our nation on a better path for economic growth, opportunity, and prosperity. A strong foundation creates positive conditions for growth, including more resources for public and personal investments in our future, and a stronger safety net.
3. This article relates to Chapter 6 on GDP (Counting market values, pg.184) The global GDP is a way to measure the health of an economy and overall production during a specific time (a year). GDP gives economists the ability to monitor how a nation’s economy is doing and what trends to predict. GDP is a measure that works well. In the short run, it helps us recognize business cycles, including the ups of an expansion and the downs of a recession. In 2018, the US deficit is expected to be approximately $590 billion, which is 3.6% of GDP for the year.

Graphic 2 – “Unemployment”

4. The graphic includes the Local Area Unemployment Statistics (LAUS) program, which is a federal-statewide cooperative effort in which all states report monthly estimates of total employment and unemployment in the United States. The LAUS county data are estimated using a BLS prescribed multi-step estimation process, which gathers a variety of different information from local areas around the state. The estimates of the state’s employment/unemployment are adjusted so that all areas add to the state-wide total. The data in the graphic reflects on the county where the person lives.

5. The reason why I chose this article is because according to the San Diego County’s data, the unemployment rate was 3.3 percent in October 2018, which is an increase from the 3.2 percent in September 2018. The California’s Employment Development Department (EDD), shows that some companies may simply be unable to fill jobs because qualified workers don’t want to move to San Diego with its tight housing market and lower wages than might be available elsewhere. The unemployment rate for California was 4.0 percent statewide in 2018, and 3.5 percent for the entire United States. The total jobs in construction, financial services (particularly insurance carriers), administrative support and health care employment decreased by roughly 2500 jobs. While on the other hand, there was increases in transportation, manufacturing, tourism and government employment, according to EDD data.

6. This article relates to chapter 7 on Unemployment (“The natural rate of unemployment”, pg. 224) When unemployment rates are less than their natural rate, this can be an indication of an economy expanding beyond their capabilities. The unemployment rate is the second most important indicator of an economy, while GDP is the first. Economists monitor the unemployment rate as an important macroeconomic indicator for an economy. They use the unemployment rate to address the position of the economy corresponding to the business cycle.

Graphic 3 – “Minimum wage”

7. The graphic includes a map of the minimum wage laws in the United states. Back in the 1960s, the federal minimum wage was set to corresponding the productivity of the economy. If the federal wage had kept at that pace, then it would nearly be under $19. However, in 2009, the federal minimum wage was set to $7.25 nationwide. Over time, some states and cities have raised their minimum wages to $11.50 per hour. But when the minimum wage increases, the employers also increase their costs onto the consumers in the form of higher prices, or cut costs elsewhere leading to a less full-service and be more customer self-service. As a result of this, this could mean fewer hours, and less jobs for less-skilled and less experienced employees.

https://www.dol.gov/whd/minwage/america.htm – stateDetails


8. The reason why I chose this article is because I am an advocate for higher minimum wage in California. Raising the minimum wage is one of the best tools we have to lift incomes our economy. Two years ago in 2016, Governor Brown sign SB 3, a bill that increases the minimum wage in California to $15 per hour by 2022. The state governor’s decision makes California, the first state in the United States to promise to raise the minimum wage to $15 per hour statewide. However, from doing my research, a new study from economists at the University of California, Irvine find that over the past years, increases in the minimum wage have not yet reduced poverty levels in disadvantaged neighborhoods.
* Extra credit: This website is for the new study that I put in the paragraph, it is an interesting article that relates to chapter 5 (price control)
https://www.epionline.org/oped/minimum-wage-hikes-a-poor-way-of-lifting-people-out-of-poverty) *

9. These two articles relate to Chapter 5 Price Controls (“What Effects Do Price Floors Have On Economic Activity” pg .160). Most people believe that raising the minimum wage is a simple step that the government can take to improve the standard of living of the low income people. However, what they don’t realize is that business generally wants to keep costs down, so in the long run, they will try to reduce the amount they spend on labor. They might replace workers with machinery, shorten work hours, or even relocate to states that don’t have minimum wage laws.