The Federal Minimum Wage Debate
Now that the Affordable Care Act is in full swing, President Obama is shifting his focus to a new issue: raising the national minimum wage. Since 2009, the federal minimum wage has been $7.25 per hour, with some individual states requiring a higher standard. The president is proposing raising the federal minimum to $10.10 per hour.
Supporters of the minimum wage increase argue that not only would the increase help low-wage workers cover their living costs, it would stimulate the economy by giving those individuals more spending money.
Critics contend that an increase in minimum wage will kill jobs by raising costs of labor for businesses. They argue that if businesses can’t afford to hire low-wage workers, the wage increase will do the opposite of what it is intended to do: increase unemployment for individuals with lower skills.
Both sides of the issue have been relying heavily on the February 2014 Congressional Budget Office report to support their arguments on the forecasted effects of the minimum wage increase. The report predicts that 16.5 million workers will directly benefit from the wage increase, with the cumulative total of the increased earnings coming to around $31 billion. However, the report also foresees a minimum wage increase eliminating up to 500,000 jobs, creating a .3% drop in employment.
Only time will tell if Congress will agree to pass President Obama’s proposal to increase the federal minimum wage--or if federal increase will even make a difference, as states continue to raise their own individual minimum wages.
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