Proposed Minimum Wage Increase By 2015
Posted: April 12, 2013
I received a news release last July that made me laugh. It was titled, "Small Business Owners Support Fair Minimum Wage Act Introduced in Congress". In the press release, 10 small business owners from across the country are quoted as saying that they support raising the minimum wage from $7.25 an hour to $9 per hour.
At first glance, I thought the news release was a hoax. After all, who ever heard of small business owners supporting an increased minimum wage? Then I realized it was no joke. In fact, President Obama pledged in his State of the Union address in February proposed an increase to $9 an hour by 2015.
My concern with raising the minimum wage is that the least educated and least skilled workers, especially teenagers, would be priced out of the job market. Overall, the unemployment rate for teenagers is 23.4 percent. For African American teens, the jobless rate is nearly 40 percent.
The last time the federal minimum wage was raised was in 2009. In July 2007, when the wage went up from $5.15 an hour, we were in the midst of a recession. Now that the economy is picking up steam, I'm worried that employers will have less demand for the entry-level workers and thus, skew the jobless figure higher.
But it appears that many small business advocates support a hike in the minimum wage. Although two of the nation's biggest small business groups, the National Federatiion of Independent Business and the National Small Business Association, oppose any increase, the U.S. Women's Chamber of Commerce and the Main Street Alliance both support a higher minimum wage.
Advocates for an increase to $9 an hour state that a worker earning a minimum wage today is worse off than one who made the base hourly wage of $1.60 in 1968 if inflation is taken into account.
Personally, I don't have any employees who are paid the minimum wage. But I have empathy for employers who have a number of base wage earners. Although nobody is arguing that a family of four can live comfortably on minimum wage earnings alone, I would bet that many of the business owners who pay the minimum wage to a number of workers would have to raise their prices to remain profitable. And if that's the case, then what will happen to the rebounding economy?
I'd be interested in get your thoughts on the proposal to phase in the increase in the minimum wage to $9 an hour by 2015. E-mail me at:email@example.com