A Mall Divided: Who wins and loses with increases in the minimum wage.

Michael Levine, San Bernardino Valley College,

mlevine@sbccd.cc.ca.us

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Summary

How are different stakeholders impacted by minimum wage changes? This activity instructs students to analyze as unique minimum wage situation to consider the impact on various stakeholders.

Context for Use

This course is ideally applied to a principles of microeconomics course in the context of the labor market unit(s).

Students will have listened to Planet Money Episode 562: A Mall Divided, and may have completed an exercise or worksheet demonstrating they have listened to the entire podcast. The exercise references individuals mentioned in the podcast, if necessary, a refresher discussion on who these individuals may be necessary.

Students will read from a textbook or prepared notes on the classic model of minimum wage such as Section 4.1 in OpenStax Principles of Economics.

A mini-lecture of the theoretical big picture costs and benefits of the minimum wage (improve standard of living for MW earners, increases in consumer prices, impact on small business, etc) should be given in addition to, or in lieu of, the readings.

There are no class size limitations, teams for four or five are ideal for this exercise.

Overview

In 2012, the city of San Jose, California raised its minimum wage from $8 to $10. The Westfield Valley Fair mall straddles San Jose and Santa Clara, which still had a $8 minimum wage so each side of the mall had different minimum wages. This exercise asks students to consider the impact to store owners, customers, and employees as a result of this unique situation to extrapolate the impact of minimum wage changes on the economy as a whole.

Planet Money aired an episode about the Westfield Valley Fair Mall (Episode 562: A Mall Divided) interviewing various stakeholders. Students will have listened to this podcast prior to participating in the activity.

Expected Student Learning Outcomes

Students will consider the various winners and losers when considering the impact of minimum wage changes.

Information Given to Students

The following question does not have an explicit right or wrong answers. You are to discuss your opinions as a group and jot down your answers as well as your justifications. I will randomly select one of your team members to answer for your group when we discuss these as a class.

In Planet Money #562 the story was told of the Westfield Valley Fair Mall that straddles the border of San Jose and Santa Clara. Rank the following individuals from MOST NEGATIVELY EFFECTED to MOST POSITIVELY EFFECTED from the increase in the minimum wage in San Jose. Your rankings should consider both the short-term impact for the stakeholders as well as any long-term effects.

A) The owner of the Shoe Palace, a shoe store on the Santa Clara side.
B) The owner of Foot Locker, a shoe store on the San Jose side.
C) The owner of Wetzel's Pretzel's who has stores on both sides of the mall.
D) An entry-level worker at a store on the Santa Clara side.
E) An entry-level worker at a store on the San Jose side.
F) A customer who frequently shops at the Westfield Valley Fair Mall

Teaching Notes and Tips

After the discussion, the instructor should pull back from the Westfield Valley Fair Mall to an entire economy. Between the owners, customers, and workers, how are individuals around the entire economy impacted from minimum wage changes? Do we think the behavior around a state border (CA/NV) would be similar to the city border? Make sure students are considering the difference between short-term and long-term impacts for the stakeholders.

Assessment

An essay question for either an exam or assignment:

How do you feel about raising the federal minimum wage to $9 per hour. Include in your argument at least two parties who would benefit (if you are for the increase) or would be harmed (if you are against).

References and Resources

Link to Planet Money 562: here