# Minimum Wage—Policy Analysis
The following is an excerpt from the upcoming publication under Macroeconomics. The research-focused report written with a storyline discusses the intersection of policies, economics, finance, science, technology, art & culture. This is a signature presentation from The middle Road. The Biden administration’s well-thought-out current policy to increase the minimum wage to $15 per hour. Minimum wage enables social change and impact by empowering marginalized and underserved communities globally. Further, many students in the US work part-time to fund their education and serve as an essential source of meeting operational expenses. As tuition fees have increased steadily over the years in the US, wages, mainly minimum wages, have not kept in step, creating a widening gap between the two. The productivity of employees has gone up, and so should the minimum wage. Let’s take a look at both the demand and supply side of this policy.
Demand Side Economics: An increase in the minimum wage would increase the disposable income adjusted for consumption propensity. Example hours per week in a month translates into $2400 per month. If the marginal propensity to consume is 70%, i.e., you will spend 70% of your earnings on goods and services is $1680. If the minimum wage is $11, the increase in consumption is (15-11)*40*4 per month=$640 per month. Y is the output or income of all households. The income is divided between savings and consumption. T is the summation of all taxes i.e. corporate and sales tax.
The disposable income is Y-T; Left Y = Output, T: Taxes