Obama’s push for a minimum wage increase sets off a fierce debate
02/14/2013 9:30 AM
05/16/2014 9:08 PM
Three and half years after many minimum wage workers got a raise, President Barack Obama and House Speaker John Boehner had a war of words Wednesday about whether another raise is due.
The president, in Asheville, N.C., built on his State of the Union remarks Tuesday night, calling for Congress to help the economy by increasing the federally required base pay from $7.25 to $9 an hour by the end of 2015.
Boehner dismissed the notion, telling reporters in Washington, “I’ve been dealing with the minimum wage issue for the last 28 years that I’ve been in elected office. And when you raise the price of employment, guess what happens? You get less of it.”
The latest battle over minimum wage includes Obama’s call to index it to inflation so that the lowest-wage earners keep pace with higher prices for food, housing, transportation and other necessities.
If minimum wage growth had mirrored cost-of-living increases over the past four decades, analysts say the rate would be $10.56 today.
A bump up, Obama believes, also would help the U.S. economy, which requires consumer spending to grow.
“There is growing consensus on the left and right that one of the best ways to get the economy going again is to put money in the pockets of people who work, who will spend it as small businesses in their communities,” agreed Lara Granich, director of Missouri Jobs with Justice, which advocates for a higher minimum wage.
Others disagree. Obama’s proposal, as with all past plans to mandate a higher wage floor, faces opposition from some Republicans and economists. With a Democratic majority in the Senate, a bill might have traction there, but it’s sure to face stiff opposition in the Republican-led House.
Opponents say requiring employers to pay a higher minimum wage will cause them to reduce staff, throwing some workers off the job and doing nothing to improve the overall economy.
“Minimum wage hikes lead to job losses,” said Michael Saltsman, research director at the Employment Policies Institute, citing an academic report in the Southern Economic Journal that estimates loss of 467,000 jobs if the wage floor rises. “Raising the minimum wage makes it more difficult for the least-skilled job seekers to get hired, while failing to reduce poverty.”
A federal minimum wage increase could affect about 15 million workers directly, according to government data. It would affect millions more indirectly, assuming it causes workers who earn more than the minimum wage to get proportional raises to stay above the lowest pay rate.
Several public opinion polls last year found that about seven out of 10 likely voters supported a minimum wage increase and backed tying the rate to inflation. Support was nearly universal among Democrats. Three-fourths of independents and about half of Republicans polled generally backed inflation-adjusted increases.
On the campaign trail, former Gov. Mitt Romney also backed an inflation-adjusted minimum wage.
“Raising the minimum is an issue that polls well,” said Matthew Condon, CEO of the Athletic and Rehabilitation Center and an active participant in the Kansas City small-business community. “But we need real discussions because if you raise the costs of providing goods and services, and that includes wages, employers will pass those higher costs on to consumers, and it will impact all of us.”
Condon said Congress would be well served to involve employers in discussing minimum wage legislation.
Sen. Tom Harkin of Iowa and Rep. George Miller of California, both Democrats, said Wednesday they are co-sponsoring minimum wage bills to raise the rate to $10.10 an hour.
“While we believe the president’s proposal is lower than what is needed, there is no question that last night he threw the door open for a robust discussion on the importance of raising the minimum wage,” the congressmen said in a joint statement.
Obama noted in his address that 19 states have passed laws raising the minimum in their states above the federal rate. Missouri is among them. State law set the rate at $7.35 an hour, effective Jan. 1 this year.
State law provides for the Missouri minimum to go up or down each Jan. 1, depending on changes in the cost of living.
That’s a wise public policy position, said Clyde McQueen, who leads the Full Employment Council in Kansas City.
“The state recognizes that the costs of things go up,” McQueen said. “It would make sense for the federal government to realize it, too.”
McQueen disputes the argument that employers cut jobs to afford minimum wage increases. He said that after 30 years in the job-training and development business he has never seen a “cause and effect in which jobs are lost when the minimum wage rises.”
The White House said a $9-an-hour rate would put the federal minimum at its highest inflation-adjusted value since 1981. At that time, the minimum was $3.35 an hour.
The rate ratcheted up four times during the 1990s to stick at $5.15 an hour for 10 years. Legislation eventually sent it higher in a three-step process, moving it to $5.85 in 2007, to $6.55 in 2008, and to $7.25 in 2009.
A study last year by the National Employment Law Project determined that 58 percent of the post-recession job growth has been in low-wage jobs, leading advocates to say a minimum wage increase is increasingly important.
A 2012 analysis of income data by the Economic Policy Institute found that more than half of minimum wage earners are women, more than four in five are 20 years of age or older, one-fourth are parents of dependent children, and more than one-third are married.
“Moreover, the average affected worker earns about half of his or her family’s total income,” according to that analysis.