Minimium Wage Proposal
Posted: March 7, 2014
President Obama's proposal to have the federal minimum wage raised to $10.10 by 2016 may be falling on deaf ears as Senate Majority Leader Harry Reid recently postponed a vote on the legislation until lawmakers return to Capitol Hill March 24th. However, some governors are taking up the issue without a push from the federal government while other state executives are calling the minimum wage debate shortsighted.
According to the Congressional Budget Office (CBO), nearly 500,000 workers would lose their jobs if the minimum wage were to go up from $7.25 to $10.10 over the next two years. "Some jobs for low-wage workers would probably be eliminated, the income of most workers who became jobless would fall substantially, and the share of low-wage workers who were employed would probably fall slightly," said the report.
In addition, the CBO report stated, "Once the increases and decreases in income for all workers are taken into account, overall real income would rise by $2 billion". However, our economy is valued at $16 trillion.
I have been in favor of raising the minimum wage to some extent. I'm not sure what is so magical about $10.10 per hour, but it seems to be the wage level that most economists feel comfortable with. Business lobby groups, on the other hand, are strongly opposed to any increase in the federal minimum wage.
Despite the doom and gloom outlook for job losses resulting from a higher minimum wage, at least two states are experiencing economic growth after raising their base wage. The state of Washington, which raised its minimum wage in 1998 linked to the cost of living, now pays entry-level workers $9.32 per hour. Meanwhile, job growth continues at a pace of 0.8 percent, higher than the national average.
New Jersey voters last November approved increasing the minimum wage by $1 to $8.25 an hour, tying future increases to the consumer price index. Since the start of the year, private employers in the Garden State have added 8,320 jobs, which was the fastest pace for job growth since December, 2012.
I am not worried about the added payroll costs that the Wal-Marts and McDonald's would feel as a result of a higher minimum wage. But I am worried about the small, independently-owned retailers and service businesses that would pass along the added cost to consumers.
Unless something drastic occurs, small business owners in Wisconsin who do not favor a higher minimum wage will not have to worry since it doesn't look like Governor Walker and the Republican-led state senate and assembly are interested in raising the wage for entry-level workers any time soon.