ObamaPresident Obama has hit the campaign trail again to push policy reform that will raise minimum wage to $9 per hour. The White House asserts that increasing minimum wage elevates the economic status for the working-poor, particularly single parents and women, who account for 60 percent of hourly employees. Raising the wage helps parents avoid debt and support their families.

However, this initiative does not account for the potential detriment that raising minimum wage can have on businesses and unemployment. Though seminal research has found that minimum wage increases benefit workers and the costs often fall on consumers, it also has a negative impact on low-skill workers. The American Enterprise Institute, a Republican-leaning think tank, found that a 10 percent increase in minimum wage decreases low-skill employment by a minor percentage. Since low-skill workers will have to be employed at a higher rate, employers cut hours and some lose their jobs.

Despite their findings, most evidence supports President Obama’s position.

Alan Krueger, who is now Chairman of the White House Council of Economic Advisers, and his colleague David Card produced research in the 1990s that focused on the results of New Jersey’s decision to raise minimum wage. Their findings included:

  • No evidence that the rise in New Jersey’s minimum wage reduced employment at fast-food restaurants.
  • Prices of fast-food meals increased in New Jersey, so the burden of cost was passed on to consumers.

Even the consumer costs are minimal. “The Effect of Minimum Wage on Prices,” a 2004 collection of previously published research found that a 10 percent increase in minimum wage increases food prices by less than 5 percent. So though Republicans and Democrats have opposing viewpoints on President Obama’s proposal, the real impact of minimum wage is pulling the poor out of poverty by helping 15 million workers and paying a little more for a blouse or cheeseburger.

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  • Mademoiselle

    Minimum wage should never have been allowed to be lower than the necessary living wage by state. No employer should be allowed to pay an employee an annualized wage that would put that employee below the poverty line.

  • Ask_ME

    It won’t help. Employers will simply stop hiring working class people period. If he wants to address this issue he needs to start with the source: the trade deficit and outsourcing jobs.

    As long as companies can make a profit paying people in China $2.50 an hour rather than paying Americans $9.00 they are going to go that route. This country needs to raise taxes for companies who import their goods to America. Something like that will drive companies to stay in America. At that point a $9.00 minimum wage will be doable.

  • silkynaps

    Raising the minimum wage means that the additional cost is passed on to the consumer, thus increasing the cost of living and keeping minimum wage workers impoverished.

    Focus on training and education to help minimum wage earners become skilled laborers or professionally employed; thus, improving their overall quality of life. Not just a temporary bandage.

  • The people will just stop hiring and consumers will pay additional cost arguments are always tossed at intentions to raise the minimum wage. These are obviously people who do not work for minimum wage. Consider that without the minimum wage companies like Wal-Mart would pay employees as low as two dollars an hour, minus the rent to live in the dormitories beneath the wal-mart factory.

    • Ask_ME

      Wal-Mart already pays above minimum wage. Some locations pay $10.00 an hour.

      Companies like McDonalds, Burger King, Taco Bell, service occupations etc. will be effected by raising the minimum wage.

      They can easily get around this by 1). Giving employees LESS hours (many of these folks are already part-time) and 2). Closing down some locations while hiring less employees. Full-time people would likely be expected to do more with the loss of part-time people.

      Rather than pay a janitor $9.00 an hour companies will likely require employees to help keep the facility clean.

      There are ways to get around minimum wage.

    • beth anderson

      WalMart starts at minimum wage. Then you can get raises once a year , UP to .40 an hour. And thats if you have been a good worker. And when minimum wage goes up, they do not adjust your pay accordingly. So its like you dont make much more than minimum wage , even after you have been there for 5 years. I know this because my nephew works there.

  • The cost of childcare is a concern I have. Most daycare centers pay their workers a minimum wage. This will hurt many small business owner’s pocket books. If the cost of daycare goes up, I currently pay 450 a month, it will also hurt consumers. Rather than thinking of myself the consumer, or the owner of the center, I considered the children. They deserve the best care. Nursing home and Daycare center employees are among the lowest paid service workers. Is it not a priority of ours to ensure that our babies and elderly relative have the highest quality care? If it is indeed a priority then why do we pay them the least? Is there a way to make childcare more affordable, without harming the business owner, or sacrificing care quality?

    • Fantastico

      Yes, child care must be treated as a public good. Then integrated into the Public school system through extended school hours and universal pre-k.