Gross living wage instead of the stablished minimum

Gross Domestic Product (GDP) is a measure of the total marketplace
worth of final goods and services produced in a certain year. The
primary objective of the GDP’s calculation is to determine financial production,
and assesses outflows about income, as it is states in the article,
“National Income Accounting: Measuring Output,” 2007 from the State
University Of New York. The article debates fluctuations in
Puerto Rico’s economy and the resolutions diverse writers have suggested. Also,
it makes a contrast between the Puerto Rican and USA GDP and the islands reliance.
A breakdown of fiscal growth discloses that fiscal policies are crucial in the
determination of solutions to economic welfare when referring GDP (real and nominal).

As of 2000, with 31
percent, Puerto Rico had the lowest employment in the Americas and the
Caribbean, as the article “Restoring Growth in Puerto Rico: The Economic
and Policy Challenges”, claims. Also,
Puerto Rico’s economy has had numerous defeats since the 70’s, in disparity to
rises in the 50’s and 60’s. The articles suggest that these downfalls were
consequences of US dependency and poor labor force input. Additionally, both
articles conclude that the substantial dependence on assistance programs lowered
labor rates on the country.

The articles powerfully state that rising
employment is vital to reestablishing economic growth, and, if it is not
accomplished it, it will result in a decrease in GDP for many years. Mutually,
the articles compare GDP measurements on the island and in the US. In the United
States, consumption (being two thirds of the GDP) is the key element, investment,
government spending and the net exports. In the same way, Puerto Rico measures
for GDP, but they use the domestic investment factor in a different perception,
which is mostly because fixed domestic investments and inventory fluctuations are
provided by both the private and public areas of the country’s economy.

Moreover,
LaBossiere’s article, “Who Is Responsible for A Living Wage” states: “…either
employers can pay employees enough to live on or the taxpayers will need to
pick up the tab.” The issue is, if Puerto Rican’s employers pay all their
employees a living wage instead of the stablished minimum wage, this could lead
to an even higher unemployment on the island. Since most small business would
not be able to assure many medium salaries; they will employ fewer workers. Thus,
this fact could negatively impact the island’s overall economy.

Similarly,
Derek Thompson in his article, “This is the American worker’s saga” says that the
stuff people are making nationally is getting cheaper, but the stuff people
need is getting more expensive. That is why people in Puerto Rico feel so
squeezed. LaBossiere’s article reflects every aspect of what Thompson
emphasizes in that thought. He makes a clear point that the worker-class
struggles each day more and more to keep up with the essential necessities, but
work much more hours than in previous decades and, paradoxically, live in
desperate poverty. Low income families hardly can pay for the main necessities:
shelter, food, and health care.

The aim of raising employment engagement through
government incentives and fiscal policy is achieved through public transfers
from the USA. These allocations represent 25 % of the people’s income. The
federal supported Food Stamps Program was introduced in 1975. Soto-Class &
Lamba-Nieves articles’ points out that the way this and other federal programs
were administered produced labor force involvement to falling-off. 

One of the articles is about a single
mother of two children. Absurdly, it states that if she has $0 income and be
suitable for all transfers, she would earn more in entitlements than if she
worked part time less than twenty hours per week. Also, she would earn about
$40 per month, which is more than if she worked full time at a minimum wage.
This example proves the negative consequence that fiscal policy has had by incentivizing
the islands’ citizens to not work.

“Restoring
Growth in Puerto Rico: The Economic and Policy Challenges” also states that the low employment percentage of
Puerto Rican males can be accredited to numerous aspects: exile of extremely
employable applicants to the US for higher salaries, the lucrativeness of disability
coverage and the Nutrition Assistance Program transfers from the USA government.

Furthermore, in the article, “Chapter 5
National Income Accounting: Measuring Output,” a contrast between nominal and
real GDP was not straightway debated; therefore, further revisions where required
to develop a contrast. According to a study made in 2014 by Soto-Rodriguez, the
economic growth in Puerto Rico in the 80’s period had an average GDP of 0.3%,
which contemplates 4.8% average inflation percentage for that period. Consequently,
by taking in account the inflation ratio, the percentage in query is the real
GDP and not nominal. The difference between one and the other is that the real Gross
Domestic Product includes the
inflation rate and nominal does not take it into consideration.

GDP Growth in the island has endured delayed
since recent years, 2006 according to the inferences of a study made by
Enchautegi and Freeman in the same year. The economic growth study displays
that a diversity of reasons contributed, which was that the GNP was raising
much less quickly than the GDP and the employment growth persisted shocking
since the year in mention.

            In
conclusion, all articles develop a comparable conclusion, which is all about
similarities. All consumers will draw on upcoming credit to support the
household income. The income-saving bond in Puerto Rico is moderately low
because 25% of the residents obtain federal funds as particular salary, which
does not allow savings. The federal funds are the principal reason of the weak workforce
input that is conducive to deprived savings relationships, which develops high
interest rates after customers use credit to compensate the domestic earnings. Since
every dollar is spent as a tendency to consume, consumption will permanently exceed
income for the lowermost earning section of the labor force.