Celebrities make HOW MUCH?!

Written by:  Joan Starich

Surgeons work hard for their high salaries and so business owners, CEO’s, engineers, and some of the other wealthiest jobs America has to offer. But even compared to the highest and most elite occupations – celebrities earn up to 10 times more money.

            Celebrities get paid more than doctors, students with masters’ degrees, and even some government officials. Britney Spears makes $58 million in a year. Simon Cowell makes about $90 million in a year. Tyler Perry makes $105 million in a year (Weisman). Just to put these numbers into perspective: Obama made $1,728,096 in 2010 (Soleman). Maybe I’m the one who’s crazy, but in my opinion the President of the United States should make more money than someone who sits in an American Idol judge chair all day and makes fun of singers on television. But it isn’t up to me - or even the president – how much celebrities make. It’s all in the hands of the American population.

Famous celebrities we all know and love actually contribute very little to society, so why do we keep putting paychecks in their pockets? Economists took a look deeper into the situation, and found that most of the money comes from dedicated fans and viewers from television sets. If you think that Britney Spears makes enough money – her record company makes even more. Your $10 towards that Luke Bryan CD goes a much longer way. The store it was purchased from makes a percentage profit, the workers at the store make a percentage profit, the record company makes a profit, the manager of Luke Bryan makes a profit, and lastly, Luke Bryan. So in reality, the money doesn’t just go to the celebrity, but it is spread out among various sources. What grants actors and celebrities so much money in a year is the amount of popularity they have among fans, and their significant roles played in our American culture.

Maybe if Obama came out with a mix-tape, he’d make just as much as Beyonce. Celebrities’ paychecks all depend on their status not only with the American people, but with fans all across the globe. Justin Bieber is touring the country this summer. Here is a Bieber link for ticket prices for a concert in LA on June 24^th. Take a look at some of the best seats, and how much they cost. 

 

 So whose fault is it that celebrities make so much money? It’s up to the die-hard crazy fans that are willing to spend hundreds of dollars on them. Whether this is a giant waste or not, it’s all part of the invisible hand theory in that people will spend their money on their own interests, unintentionally contributing the entire economy. Even if celebrities do make too much, they are the people more likely to make bigger purchases that benefit our economy as a whole. So, next time you complain that doctors or surgeons make too much money – take a look at the larger sources. (Did I mention that Opera rated the #1 most money making celebrity with $165 million?!) After considering all these factors, my question to debate

Do celebrities make too much money?

http://www.businessinsider.com/the-10-highest-paid-celebrities-in-hollywood-2012-8?op=1

http://www.pbs.org/newshour/rundown/2011/04/making-sene-how-much-did-president-obama-make-in-2010.html

Minimum Wage

Written by: Karissa Sime 

Anyone who has tried to get a job recently knows that more and more companies and businesses are trying to pay minimum wage so they don’t have to spend as much money. Obviously to many people’s agreement, the government has been talking about potentially raising minimum wage to $9 per hour. The reason they are doing this is because they believe that if they raise the minimum wage one or two dollars, then more young people will be eager to get a job because they think they are getting paid more, thus causing more jobs being created and then making more money, which would potentially stimulate the economy. The reality of this however is that the increase of minimum wage could not help but harm the economy. From the article Hidden Costs of Minnimum Wage Casey B. Mulligan said “Moreover, elevating the wage $2 above the market does more than twice the damage of elevating the wage $1 above the market” . The reason that this would harm the economy more is because the “damage would far outweigh the benefits. Instead of raising the taxes so much that it then outweighs the benefits of raising the minnimum wage rate, we should lower the minnimum wage rate so that the benefits outweigh the damage by far more.  Market wages normally tend to increase over time with inflation and as workers become more productive. “As long as the minimum wage is a fixed dollar amount, the tendency for market wages to increase over time means that economic damage from the minimum wage is shrinking.” What Casey B. Mulligan is saying here is that as long as we continue to keep the minimum wage at a steady rate, the economy will not have to worry as much about the minimum wage having a negative effect on the economy. 

                A huge problem that has been seen recently is that workers who do not have the skills as most others and who are bairly skimming by with the requirements are facing a downfall in their wages. “The least-skilled workers are seeing their wages fall over time, largely because they are out of work and failing to acquire the skills that come with working.” One of the new ideas that has been talked about more and more recently is the idea of not having a minimum wage law. Many people have said the same thing that Casey B. Mulligan talked about in his article. This is what he said. “The minimum wage law restricts flexibility on cash wages, by establishing a floor, but makes no rule on fringe benefits.”  Having flexibility on cash wages based on what kind of education or how qualified a person is for the job would help keep things fair but still would not get rid of the fringe benefits which are extra benefits that supplement an employee’s  salary. Overall, the problems with minimum wage are that we can’t decide on where the perfect place is so that we will still be gaining from the benefits but will still be making enough money.

How Bad is the Sequester?

Written By: Maci Woods 

How bad is the Sequester?

As a part of a military program run by the Department of Defense, I felt the wrath of the sequester cuts. Commanding Officers of summer programs were found without funding and military bases closed their doors with lack of funds as well. Along with the US Naval Sea Cadet Corps, I wondered what other valuable programs were cut because of the sequester. With a little bit of research I found an astounding number of victims to this budget cut that had numerous effects on the economy.

Of the many things cut, education is the most affected. Many states will find themselves without government funding. $54.5 billion dollars will be cut just in the state of Florida for educational funding. The department of defense also lost a large amount of funding to each of its branches. 90,000 civilian employees that work for the DoD will find themselves unemployed as well as maintenance workers for naval vessels in Norfolk, VA.

President Obama recently held a press conference, stating that the sequester took a huge toll on job growth. Although the unemployment rate dropped to 7.6 percent in March, the budget cut has cut as many as 750,000 jobs this year.

 So after all this bad news, how is this $1.1 trillion budget cut going to be fixed up in Washington? As us AP students have learned, will a fiscal policy be the answer?

Politicians have been scheming a plan for the past months on whether to increase government spending, decrease taxes, or vise versa.

On the republican side, congressman want to give more power to the executive branch to decide on what exactly needs to be cut. Programs such as Medicare, Medicaid, and Social Security would not change; only defense and domestic spending would be affected.

The democrats want to have a policy that increases taxes by cutting tax expenditures and cuts spending.

In your opinion, is giving the power to the white house to cut what they want too risky? Or is a contractionary fiscal policy the answer?

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"How to fix sequestration." Washington Post. N.p., n.d. Web. 30 Apr. 2013. <http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/07/how-to-fix-sequestration-without-raising-taxes/ >.

ers, and Alex. "W.H.: Sequestration 'headwind' on job growth - POLITICO.com." Politics, Political News - POLITICO.com. N.p., n.d. Web. 1 May 2013. <http://www.politico.com/politico44/2013/04/wh-sequestration-headwind-on-job-growth-160935.html>.

NFL Draft

By Jamison Cook 

The Draft is a big moment for all thirty two National Football League teams.  Here in the Draft, they can pick the new cornerstone of their franchise, or end up picking a bust that plays three games before he gets cut from the team.  All of the teams understand the importance during these few days during April. 

            Depending on when you get drafted directly correlates to how much money you make.  The first round draft pick will make a lot more money than a rookie drafted in the fourth round.  First rounder’s can make around ten million on average, while later picks only make around one million.  Now this seems like it is a lot of money for most people, but the players are making all their salary in the average career expectancy of 4 years.  So while other people make the earnings spread out through their life and never get 6-digit checks, these rookies don’t know how many of these checks they will be getting and this could be their only source of income for their entire lives. 

            While the players get their checks, the league is the one that is handing them out.  The league created about 9 billion dollars in revenue last year and how they split up this money is very important.  At just about half of the total income is distributed to the players and coaches and staffing of the franchises.  So when the teams draft a player with a top pick they have to make sure that their pick will pan out and become a productive player.  If the player does not live up to their expectations (JaMarcus Russel, Ryan Leaf, etc.) they become a huge waste of money for the team.  The team will pay them a contract for millions of dollars and they might not even start a game for them.  This causes big problems within the franchise as it takes up a lot of cap room that teams have to get other players that will be better, and they are cap penalties if they cut the player and then they have to pay even more money.  Economically, that is a bad way to run an organization.

Here is a graph that depicts the value of draft picks. On the Y-axis is a formulated equation that puts a number value on overall performance, and on the X- axis it shows when the players were drafted.  As you can see, the earlier someone is drafted, the more likely they are going to have a successful career.  This means that franchises for the most part have been making good decisions.  However, there are some fluxes in the graph where some top picks over the years haven’t done as well but they still out perform their draft class for the most part.   Also by looking at the graph you can see that the later a player is picked, his performance is significantly lower.  All in all, the NFL is a business that has to deal with economics and the Draft is a prime example of the type of economic situations this league experiences.

 

What Economists Think About Raising the Minimum Wage

What Economists Think About Raising the Minimum Wage

By: Terry Richard

To examine whether highly educated economists would support raising the minimum wage, 38 experts were questioned by the Chicago School of Business to see what their thoughts were. For each question, the economists could either strongly agree, agree, decide they are uncertain, disagree, strongly disagree, or have no opinion on the issue.

The first question dealt with whether raising the minimum wage would make it more difficult for low-skilled workers to find jobs. The question specifically asked, “Raising the federal minimum wage to $9 per hour would make it noticeably harder for low-skilled workers to find employment.” Here are the results of what the economists had to say.

As you can see, zero economists had strong opinions on the issue. A third of the economists agreed, while a third disagreed. In addition to this, a quarter of the economists remained undecided on the issue.

A private study twenty years by Alan Krueger and David Card used a natural experiment to test how employment would be effected by changing the minimum wage. Their study revealed that employment was not reduced. Other studies’ performed revealed minimal changes in employment, but most were generally mixed results.

Another question on the survey of economists dealt with the risks to low-skilled workers by raising the minimum wage. The question specifically asked, “The distortionary costs of raising the federal minimum wage to $9 per hour and indexing it to inflation are sufficiently small compared with the benefits to low-skilled workers who can find employment that this would be a desirable policy."

From this question, we can see that almost half of the economists asked agreed that the marginal benefit exceeded the marginal cost. When evaluating any economic question, the first thing that should be considered is whether the marginal benefits exceed the marginal costs. Almost half of these highly educated and experienced economists agreed that it did, while a third of these economists decided that they were uncertain on their position. Only a slim 11% argued that the costs of raising the minimum wage are not worth the risk.

However clear the results may have been, we need to bear in mind that this was a small sample of economists strictly. These economists cannot represent the general opinion of economists around the world. The purpose for the survey was likely to evaluate the opinions of people who study this for a living. To get better results, people who this would be affecting should be surveyed if the research wants to better evaluate whether or not the benefits outweigh the costs. However, the results of these elite economists allows for a better representation of what scholars believe regarding the issue.

In contrast to the idea of raising the minimum wage, an idea to offer earned income tax credit to low-skilled workers has been brought up. This policy is supported by Professor Christina Romer, as well. Minimum wage is a sensitive topic to many people, but this is an issue that our government will likely be discussing soon. Inflation is a growing problem in our country, and more ways to compensate for this are becoming in effect.

 

Rampell, Catherine. "What Economists Think About Raising the Minimum Wage - NYTimes.com." The Economy and the Economics of Everyday Life - Economix Blog - NYTimes.com. 4 March 2013. Web. 1 May 2013. <http://economix.blogs.nytimes.com/2013/03/04/what-economists-think-about-raising-the-minimum-wage/?ref=economics>.

"IGM Economic Experts Panel  IGM Forum." IGM Forum | Initiative on Global Markets. 22 Apr. 2013. Web. 1 May 2013.

<http://www.igmchicago.org/igm-economic-experts-panel>.