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Possible minimum wage raise divides parties

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In his State of the Union address last week, President Obama moved to help America’s lowest earners. Suggesting an increase in the federal minimum wage to $9 from its current amount of $7.25, the president framed his proposition as a conscientious one.

“In the wealthiest nation on Earth, no one who works full time should have to live in poverty,” Obama said, to much applause from his fellow Democrats.

There are, however, foreseeable complications that could arise from a minimum wage hike. One concern is that low income workers, though perhaps not making a livable amount, are already being paid on the margin of what a poor economy will allow. The fear, which has been expressed by House Speaker John Boehner, is that employers will stop hiring.

Citing his experience with minimum wage issues during his past 28 years in public office, Boehner asked the press rhetorically, “When you raise the price of employment, guess what happens? You get less of it. At a time when Americans are still asking the question, ‘Where are the jobs?’ why would we want to make it harder for small employers to hire people?”

The speaker further suggested that minimum wage is not intended to be a comfortable allowance. Boehner appears to think of the “living wage” as a sort of entry point for unskilled labor – a place where they start their climb for prosperity. Using metaphor, the speaker lamented the inverse effect a minimum wage increase could have on ambitious but unskilled workers.

“When you take away the first couple of rungs on the economic ladder, you make it harder for people to get on the ladder. Our goal is to get people on the ladder and help them climb that ladder so they can live the American dream,” Boehner said.

Democrats look to minimum wage’s brief history for reassurance that an increase is the right decision.

Since the introduction of a minimum wage in 1938, and after the subsequent raises it has experienced, there has never been evidence of job loss. A study by the Center for Economic and Policy Research verifies that while businesses may cut hours or skimp on benefits, their hiring practices remain largely unchanged.

“Economists have conducted hundreds of studies of the employment impact of the minimum wage. Summarizing those studies is a daunting task, but two recent meta-studies analyzing the research conducted since the early 1990s conclude that the minimum wage has little or no discernible effect on the employment prospects of low-wage workers,” the study concluded.

Tim Carman, owner of Union Street Diner, confirms the CEPR’s findings.

When asked what a higher minimum wage would mean for his employees, Carman said, “I don’t think it will affect us much.”

An owner of a small business, Carman says he doesn’t have the luxury of dropping people. Any extra costs that may come about, he predicts, will be compensated for by slowly raising prices.

Still, Republicans favor programs like the Earned Income Tax Credit as a more appropriate measure to aid low wage workers. However, Democrats counter that workers would be best served by combining these refunds with a $9 minimum wage.

 

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