During his State of the Union address, President Obama called for an increase in the federal minimum wage from $7.25 to $9 (indexing it to inflation), sparking numerous debates among economists, including whether the move would truly help workers or stymie job hiring.
“An increase in the minimum wage raises the income of those who are employed, but it also raises the cost of hiring unskilled labor and can potentially reduce the number of people hired by businesses. So there are winners and losers from this policy,” writes CBSNews.com, adding, “Those who remain employed and receive higher incomes are better off, and those who would be employed if not for the increase in the minimum wage are worse off. “
The most-often cited study, writes the news source, was done by the UC Berkeley’s David Card and Princeton’s Alan Krueger, who is also head of the White House Council of Economic Advisers. Their study suggests that increasing the minimum wage does not have significant effects on employment. On the opposite side of the spectrum is a study by David Neumark and William Wascher, who claim that workers are “worse off overall when the minimum wage goes up.”
Meanwhile, the Washington Post writes that increases in the federal minimum wage would only take effect if the rates were higher than state minimum wage rates. “So if every state already had a statewide minimum wage of at least $9, then Obama’s proposal would do nothing.” Today, only Washington has a rate above $9 per hour, with Oregon close behind at $8.95.
Proposals to boost the federal minimum wage have been introduced in Congress recent years, but none have come before the House or Senate for a vote. Following Obama’s announcement last week, U.S. Sen. Tom Harkin (D-IA) and U.S. Rep. George Miller (D-CA) said in a press release that they think $9.00 an hour is actually too low. “The two of us have a long track record of working together on this issue in Congress, and we have been working together again this year on our own new legislative proposal to raise the minimum wage to $10.10. While we believe the president’s proposal is lower than what is needed, there is no question that last night he threw the door open for a robust discussion on the importance of raising the minimum wage,” the senators said. (NACS: www.nacsonline.com)