Can you review the Memo attach and answer the questions in the memo. The spreadsheet has the data that is reflected in the memo. Please spell out the whole process using the memo. Thanks

SYRACUSE UNIVERSITY MAXWELL SCHOOL OF CITIZENSHIP AND PUBLIC AFFAIRS PAI 897 Fundamentals of Policy Analysis Case #1 A LIVING WAGE FOR SYRACUSE A growing number of cities in the United States have passed living wage legislation in recent years. These laws require that affected workers be paid a minimum wage that is higher than required by federal minimum wage laws. In 2007, the US. minimum wage reached $7.25 per hour.1 Typical minimum wages mandated by living wage laws range from $8 - $10 per hour. In some cities, nearly all workers are affected. In others, only workers employed by the government, or by companies doing business with the government, are covered by the living wage requirement. Recently, the city of Syracuse considered a living wage law. The law would only apply to employees of the city, employees of contractors that do more than $20,000 worth of work for the city, or employees of companies that receive more than $20,000 in economic development aid from the city. The living wage legislation would define any workers meeting these characteristics as \"eligible workers\Percentage of all workers earnings3 $7.25 7% $7.75 1% $8.25 2% $8.75 3% $9.25 4% $9.75 3% $10.25 3% $10.75 2% over $11 75% In addition to the above demographic data, your research has uncovered the following economic parameters. Estimates of the elasticity of labor demand with respect to wages for low-wage workers range from 0.1 in the short run to 0.3 in the long run. To interpret these elasticities, think of the wage levels per hour as the price of labor, workers as suppliers of labor, and employers as demanders of labor. Furthermore, your research staff estimates that, when possible, 35% of workers laid-off off in each wage group will find employment with non affected employers looking for the same type of labor within city limits, and an additional 15% will be hired by non-affected employers in the surrounding suburbs. (H int: for one group of wage-earners, nding similar positions will not be possible due to the federal minimum wage policy.) Based on this information, you have been asked to address the following questions in your memo: 1) How many workers in each wage group will lose jobs as a result of the living wage legislation? 2) Of these, how many remain unemployed, and how many obtain jobs elsewhere? 3) How, if at all, will the re-hiring of these workers affect the wages of workers not covered by the living wage law? If wages will change, please calculate the amount by which they will change. As the council member is concerned about workers under her jurisdiction, you only need to calculate this for other workers within the city limits. Finally, the council member would like to know if certain groups will be affected more than others. In addition to considering how different wage groups might be affected, you have been provided with the following data: 0/0 in affected 0/0 in overall Demographics of acted workers wage group labor pool % between 16-19 years old 15% 5% % living in households below poverty line 33% 23% % female 58% 48% The council member would like your recommendation for how to vote on the proposed living wage. Be certain to indicate the extent to which your recommendation is based on your analysis and the extent to which it is based on your personal value judgments. As the contents of your memo will be used to prepare the council member for debate, it is important that this information be presented in a direct, nontechnical manner that is accessible to non-economists. As such, the council member has asked that you limit your analysis to two pages and to avoid the use of economic jargon. 3 You may assume that the distribution of wages is the same in affected and unaffected jobs. Wage distribution # of Workers 5,955 Edible employees $10.96 Elasticity of labor demand 0.1 0.3 % change in v Workers laid off ea wage group 35% -0.1= % chang Workers will find jobs by non- affected employers 35% 0.1=% chang Non-affected employer/recruited 15% -0. 1*51.8=% Lose their work 64,562 85%x75955=64561.75 Earn below min. wage 75% Wages are not expected to change Unemployed population 100-(35+15)=50% $416,238.88 50%x75955=37978 $416,238.88 Will remain unemployed 37978 Obtain jobs elsewhere 37977 Median household income total # # affected # re- % earning earning Wage this wage wage wage in wage demand jobs lost in city county 7.25 7% 5,317 797.5275 51.172414 -5.11724 40.8114 14.283993 6.12171109 7.75 1% 760 113.9325 41.419355 -4.14194 4.71901 1.6516537 0.7078516 3.25 2% 1,519 227.865 32.848485 -3.28485 7.48502 2.619757 1. 122753 3.75 3% 2,279 341.7975 25.257143 -2.52571 8.63283 3.0214899 1.29492424 9.25 1% 3,038 455.73 18.486486 -1.84865 8.42485 2.9486963 1.26372697 9.75 3% 2,279 341.7975 12.410256 -1.24103 4.24179 1.4846281 0.63626919 10.25 3% 2,279 341.7975 6.9268293 -0.69268 2.36757 0.8286505 0.35513594 10.75 2% 1,519 227.865 1.9534884 -0.19535 0.44513 0.1557961 0.06676974general equilibrium effects vage=new-old/old # % change wage for # unaffected unaffected in unaffected unemploye workers workers % unaffected workers income income income income before after change wage after before after before after 20.4057036 4,519 4,534 0.3161 0.32% 7.22706167 14500 21920 14500 14454 2.35950532 646 0.2558 0.39% 7.7197059 15500 21920 15500 15439 3.74251 L,291 1, 294 0.2029 0.49% 8.20933711 16500 21920 16500 16419 4.31641414 1,937 1,940 0.156 0.64% 8.69391026 17500 21920 7500 7388 4.21242324 2,582 2,585 0.1142 0.88% 9.16898844 18500 21920 18500 18338 2.12089731 1,937 1,938 0.0767 1.30% 9.62280106 19500 21920 19500 19246 1.18378646 1,937 1,938 0.0428 2.34% 10.0104209 20500 21920 20500 20021 0.22256581 1,291 1,291 0.0121 8.29% 9.85904195 21500 21920 21500 19718