Introduction to Microeconomics 2012

http://www.businessweek.com/articles/2012-12-10/apples-cook-says-more-macs-will-be-born-in-the-u-dot-s-dot-a-dot#r=hp-ls

A big topic in the news lately is the loss of jobs in the US that are going towards China and other countries with little regulation when it comes to cheap labor. It says a lot about a company that could be paying its workers $2.50 an hour in Shenzhen instead of $15 an hour in the US. Apple has decided to build a production plant for some of its products at the cost of about $100 million. That isn’t much money in relation to their yearly earnings, but it’s a small step in what could be a large scale effort to bring some jobs back from overseas.

I found this article from the New York Times that related to a discussion we had in class about unionized low wage scale and low skill labor.   When we typically think of unions the first profession to come to mind related construction, like electricians  carpenters, and builders, as well as teachers union, which many of us may have been affected by first-hand in high school and grade school by teacher strikes.  But this article discusses a type of labor one would not typically associate with union labor, like Walmart employees (hourly wage jobs, not management  and McDonald’s employees, or “burger-flippers”.  One argument talks abut the fact that many of these workers live below the poverty line.  But would the union raise prices in the market? Yes, because if the wages were raised, the products in these two markets would no longer be bargains, but would be more expensive in order to support the new wages.  And that is the two sides of this sort of unionization.

http://www.nytimes.com/2012/12/05/business/unionizing-at-the-low-end-of-the-pay-scale.html?_r=0&adxnnl=1&ref=business&adxnnlx=1354680184-pziL6cg8VV91QcSd3UN0wg

This article in the Wall Street Journal predicts an in increase in pilot salaries, a shortage of pilots (because even higher salaries won’t enable pilots to train immediately), higher airline prices, and potentially riskier flights with some airlines.

http://online.wsj.com/article/SB10001424052970203937004578079391643223634.html?mod=WSJ_hp_mostpop_read

This new regulation would be a good one to try modeling using either the competitive labor market model to see the impact on pilot salaries of the two shocks (high retirement rates and new regulation) or a competitive goods market model to see the impact of higher pilot salaries on airline prices.