What Happens with a Minimum Wage Increase?

Is it time to raise the minimum wage?


Federal workers are getting an increase in the minimum wage from the 2009 minimum of $7.25/hr up to the new minimum wage for Federal employees of $10.10/hr. Is a national increase in the minimum wage a good idea? Let's look at the data.

Congressional Budget Office Forecast

The nonpartisan Congressional Budget Office (CBO) latest report on the impacts of raising the minimum wage found that an increase of minimum wage to $10.10 meant higher earnings for 16.5 million workers totaling $31 billion. In addition the increase would lift 1 million people above the poverty line. However, the CBO also predicted a resulting loss of about half a million jobs. Many economists would argue that the job loss would not occur because of the very low 2.7% GDP growth rate that the CBO used in its projections. In any case, even with the low CBO growth rate projection the overall effect of an increase in the minimum wage is positive for 95 percent of those impacted.

Economists Prediction of Results of Minimum Wage Increase

What about the other experts – our nation's economists? According to an article by Mike Konzcal of the Roosevelt Institute, in 12 different studies with 54 different statistical measures (elasticities) 48 of the measures showed that the increase would be beneficial to the economiy, and only one showed that an increase in minumum wages would have a significant negative impact. (Though that study was noted for its unusual methodology). So, economic research certainly appears to support the positive impact of a minimum wage increase.

Public Opinion on Minimum Wage Increase

69 percent of Americans, support the President’s call to raise the federal minimum wage to $10.10, and only 28 percent of poll respondents oppose such action. When polled, 57% of small business owners supported an increase in the minimum wage. 2012 Republican presidential candidate Mitt Romney has also come out in support of an increased minimum wage.

State and Local Action

Last year 5 states acted to increase the minimum wage. Currently, 34 states are considering an increase in minimum wages. In addition, several large metropolitan counties and cities are looking at implementing minimum wage increases.

So, if the Congressional Budget Office, our leading economists, the American public, small business owners, and Mitt Romney all support the increase, and 34 states as well as several major cities are considering a boost to the minimum wage… what is the holdup?

Congressional Inaction

As usual, Congress can't act. The Democrats have a majority in the Senate and even with some Republican support they could not get the 60 votes needed to override a Republican filibuster. In the House, it's questionable John Boehner would even allow a vote on the minimum wage. The net effect is that Congress continues to thwart the will of the public.

Is it time for us to write to our Representatives?


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