February 21, 2013 Does raising the minimum wage help or hurt workers? In political, business and economic circles, this is a debate that's still raging and is hardly anywhere near being settled. All sides point to studies that produce results supporting their particular point of view.
The current minimum wage battle opened a new front when Alan Krueger, chairman of the President’s Council of Economic Advisers, proposed that the federal minimum wage be raised to $9, meaning states could enact higher but not lower minimum wages. He also proposed to peg the minimum wage to the inflation rate going forward. President Obama endorsed Krueger's view and has proposed making it law.
Proponents of raising the minimum wage believe that it provides workers with more money to make a decent living because workers earning the current minimum wage for full-time hours don’t make enough to live above poverty. They claim that businesses won’t conduct mass layoffs because of an increase in the minimum wage; instead, they’ll just pass the cost along to customers who won’t complain because it will be negligible.
Opponents of raising the minimum wage point out that only 3 percent of the labor force make the minimum wage or less and that the overwhelming majority of these people are high school students with limited skills and people who form part of a household where there are multiple wage earners. The stereotypical single wage earner household on minimum wage is a tiny percentage of the labor force. Even so, workers with skills that are only worth minimum wage will find themselves out of a job. The massive unemployment rate of teenagers would only be exacerbated, denying them the opportunity to gain experience and earn more in the future.
What do you think?
[Harvard Business Review]
Read more Finance Watch articles.
Minimum Wage Debate: Is $9 an Hour Not Enough or Too Much?
The controversy over raising the minimum wage is raging once again.