On the same day he delivered his State of The Union address this week, President Barack Obama announced that he was increasing the minimum wage for federal contractor workers to $10.10 per hour. There’s mixed reaction to the idea...
The federal minimum wages stands at $7.25 an hour. Many agree that raising the minimum wage re-adjusts it to 1960s levels; for example, the $1.60 minimum wage of 1968 was worth more than $10.50 in 2013 dollars.
A wage hike to $10.10 would benefit 17 million employees nationally unless their jobs were eliminated, and another 11 million would benefit indirectly as wage ladders were adjusted, according to estimates by the Economic Policy Institute. David Cooper is an economic analyst at the liberal research organization. "We want consumers to have enough money to go out and spend. That's important for businesses. And when you look at the number one problem businesses are facing today, it's a lack of demand. They just don't have enough customers. So having a wage floor that sets an adequate wage is really critical and right now at $7.25 it's just too low."
The Hunger Action Network likes the idea of hiking the minimum wage. Spokesman Mark Dunlea suggests the president’s plans to invoke executive order may in the end be little more than wishful thinking, and adds, $10.10 falls short. "The Hunger Action Network believes a minimum wage of $15 an hour is much closer to a living wage that is needed to allow working families to support themselves without the need to go into food pantries and soup kitchens for food and other basic necessities."
New York state Assemblywoman Pat Fahy, a Democrat from Albany, supports the president's plan: "I think that continues to keep pressure on minimum wage and recognizing the need to lift wages of workers so that they're less reliant on other government programs."
Michael Saltzman, research director at the business-backed non-profit Employment Policies Institute, disagrees. He believes the push to raise the minimum wage isn't going to make any socio-economic change. "If you look at folks who are in poverty, according to the Census Bureau, about 60 per cent of them don't have a job and wouldn't be affected by an increase in the minimum wage. About 20 per cent of them work part time and some actually already have wages considerably above the minimum wage but they're in poverty because they don't have enough hours and so a higher minimum wage doesn't affect those folks. And then of those who do earn the minimum wage, you find that very few actually live in poor households. They're second or third earners in households with incomes above the poverty line."
Statewide Labor Market Analyst with the New York State Department of Labor, Kevin Jack, has followed the ongoing debate in labor-economic circles as to whether or not increasing the minimum wage has a negative impact. "I don't think there's any strong resolution to that. New York has continued to have good job growth even with the increase in the [state] minimum wage over the last few years."
Congressman Chris Gibson, a Hudson Valley Republican, thinks the key to solving the minimum wage issue is to roll out incremental increases coupled with pro-growth policies that would help small businesses. "Because what we want to do is help hard-working families, at the same time, we don't want them to lose jobs in the process. So, I think if we modulate this, if we work as was done in New York, that it's done gradually and with pro-growth policies, I think that we can expand opportunities, create more jobs, and, along with the industrializing and bringing back manufacturing we can help facilitate a living wage for hard-working families."
Dan Moran with NextAct of Colonie warns that the one-two punch of a higher minimum wage coupled with the health insurance mandate means employers will have to raise salaries AND cover the company contribution for all employees' health insurance. "Some surveys are indicating that 80 per cent of companies are beginning to evaluate what is going to happen when faced with these two critical issues when they come together. Is raising the minimum wage a good thing to do right now? I don't think it is."
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NPR: The Birth of the Minimum Wage in America
Chart: History of the Minimum Wage
Federal Minimum Wage Rates
OP-ED: Forbes: Almost Everything You Have Been Told About The Minimum Wage Is False
The New Yorker: Obama, Marx and the Minimum Wage