Monday, February 18, 2013

Should We Raise Minimum Wage to $9 an Hour?

If you missed our radio show on Sunday then you missed a spirited discussion among my fellow bloggers here at The Urban Politico and our guest, Rippa, about the ramifications of raising the federal minimum wage from $7.25/hour to $9.00/hour.  Now whenever this debate comes up in America, folks usually fall into one of two camps: (A) folks who take the position that raising the minimum wage will help the little guy; and (B) folks who take the position that raising the minimum wage will hurt the big guy.  But who is right?  As usual, let's turn to the facts.

Probably the best places to look in order to find out what will happen when you raise the minimum wage are those cities and states that have already raised the minimum wage.  Take San Francisco, California for example.  San Francisco currently has the highest minimum wage in the country: $10.55/hour.  San Francisco took a bold move in 2003 when the city voted to tie their minimum wage to the regional rate of inflation.  As a result, the minimum wage in San Francisco has consistently gone up each year from $8.50/hour in 2003 to where it is today.  And as the San Francisco Examiner reported:

a 2004 peer-reviewed UC Berkeley study found that the rising minimum wage had no impact on jobs or the propensity of employers to leave the area. Instead, it concluded that restaurants in particular passed on increased costs to customers, with prices rising 6.2 percent for fast food and 1.8 percent at sit-down eateries.
But, to be fair, conservative think tanks cited to data which showed the down side to raising the minimum wage:
a Washington, D.C., economic think tank funded by a restaurant and beverage industry lobbyist is pointing to a more recent University of Kentucky study showing that minimum wage laws like San Francisco’s contribute to a lack of jobs for young workers.
The study by economist Aaron Yelowitz concludes that earlier studies failed to recognize groups who are losing out on work opportunities because of the higher labor cost — specifically teenagers.
While you think about that, consider this:
An employee working a 40-hour week at the federal minimum wage would earn $15,080 per year. This income would leave a two-person household -- say, a single parent with one child -- just below the federal poverty threshold of $15,130. 
About 70 percent of minimum wage employees, however, work fewer than 35 hours per week and thus earn proportionately less, according to federal labor statistics.
When you hear that somebody working full time will only make $15k per year -- which is below the poverty line -- it's difficult to see how we, as a nation, can justify keeping the minimum wage where it is.  The cost of everything else in our daily lives continues to go up and companies and corporations raise the prices on everything from food to clothes to automobiles to housing.  But we're going to keep the minimum wage at $7.25/hour forever?  That just doesn't seem to make sense.  But maybe that's just me. 
Should we raise the minimum wage?
If we do, will it hurt big business and/or force businesses to go overseas? 
If we do, will it hurt unemployment?
So how about tying the minimum wage to the rate of inflation or to the cost of living?
Will $9/hour allow somebody to live comfortably where you live?

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