Is There A Higher Minimum Wage in the Future?

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There is no denying that something needs to be done about the economy. Though the influx of manufacturing back to American soil combined with other market trends is pushing some recovery, there is still much that needs to be done. Businesses, politicians, and workers all have radically different ideas about how to do this.

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Obama’s Plans and What Supporters of the Initiative Say 

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President Obama made his plans to raise the minimum wage in his first term, vowing to raise it from the current $7.25 per hour to $9.00. Congress last approved a hike in 2007, in the three-step measure raising it to $7.25 from the previous $5.15. However, this was before the economic meltdown of 2008, and Congress has shown no interest in upsetting the apple cart since. In his most recent State of the Union address on Jan. 28, 2014, he announced an executive order raising the minimum wage to $10.10 per hour for all newly contracted federal workers. 

This order bypassed Congress, but many question its actual impact, stating it does not apply to current federal contract workers, and essentially having a real impact, “somewhere close to zero,” according to House Speaker John Boehner. The White House claims some 250,000 workers will benefit from the executive order. 

Obama and his supporters believe that raising the minimum wage puts more money in the hands of workers, who in turn spend the money and help drive the economy. A full-time worker at the current wage earns $14,500 per year. At $9.00 per hour, he earns $18,000. The Federal Reserve Bank of Chicago estimates that for every $1.00 per hour increase, workers spend an additional $28,000 per year. 

The Argument Against a Minimum Wage Hike 

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Conversely, the group Employment Policies Institute estimates that an increase to $9.80 per hour would cost Americans 467,500 jobs. Their statistics hold that the last increase took jobs away from 114,000 teenagers. The Bureau of Labor Statistics reports an unemployment rate of 6.7 percent, but this does not include the uncounted millions of workers who have abandoned searching for a job entirely. Factoring in the reluctance of employers to hire under the new Affordable Healthcare Act, this could devastate an already stressed job market. 

Where Minimum Wage is Already Set to Increase 

In addition to the newly contracted federal workers, thirteen states have minimum wage increased slated for immediate rollout (see bottom of article for an exhaustive list). Eighteen states already have rates higher than the federal minimum of $7.25, and ten states automatically increase the rate annually to adjust for cost of living and inflation. Eleven more states plus D.C. are considering rate hikes this year. There are 3.8 million minimum wage workers in the United States, including weekly employees who earn the equivalent of minimum wage, such as housekeepers and lawn care workers. 

Image via Flickr by Annette Bernhardt

Frankly, what you make of the issue depends on whose statistics you believe. If you favor Obama’s plan, you agree that more money in worker’s pockets equates to a stronger economy. If you accept the opposing premise, you believe that forcing companies to pay workers more will lead to fewer new hires, and potential cutbacks on current staff. Last year saw a rash of strikes in the fast food and retail industries, with workers demanding as much as $15.00 per hour. McDonald’s, Wal-Mart and other affected businesses claim this would drive them out of business. 

What’s your take on the proposed wage hike? Good for business or bad for the economy? 

States Raising Minimum Wage: 

  1. Washington (highest raise to $9.32) 
  2. Oregon
  3. California
  4. Arizona
  5. Colorado
  6. Montana 
  7. Florida
  8. Ohio 
  9. New York 
  10. New Jersey
  11. Vermont 
  12. Connecticut 
  13. Missouri (lowest raise to $7.50) 

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