Support Grows for Minimum Wage Hike

(This post first appeared February 20 on Truthout and is republished with permission.)

Republicans were quick to criticize President Obama last week after he proposed raising the federal minimum wage from $7.25 to $9 during his State of the Union address, but now a poll shows that a majority of voters agree with the president that the current minimum wage is not a living wage and a hike is in order.

A Rasmussen Reports national survey released on Tuesday found that only 15 percent of voters believe the current minimum wage provides workers with enough money to live on, while 72 percent said $7.25 an hour is not a living wage.

Voters remain more closely divided on actually raising the minimum wage, with 54 percent in favor of the raising the minimum wage to $9 an hour and 36 percent opposed to the proposal. Twelve percent are not sure. Rasmussen surveyors asked likely voters if they support a wage hike before asking them if the current wage is enough for someone to live on.

In his State of the Union address, Obama declared, “in the wealthiest nation on Earth, no one who works full-time should have to live in poverty.” The president proposed tying the minimum wage to inflation so hourly wages will reflect the cost of living, and 57 percent of likely voters support the idea, while 32 percent are opposed.

The proposed minimum wage hike would directly increase wages for 13 million Americans and would have a “spillover” effect, boosting wages for an additional 4.7 million workers already earning slightly above minimum wage, according to the Economic Policy Institute.

The White House estimates that the proposed wage hike would directly boost the wages of 15 million workers.

In 2011, 62 percent of workers receiving a minimum wage were women, and supporters argue that a minimum wage hike would help reduce wage disparities for women and minorities.

Republicans quickly criticized the wage hike proposal, arguing along with conservative economists that a wage hike could kill jobs and hurt the economy. The proposal is expected to be a tough sell in the Republican-controlled House, but popular support for a wage hike, especially among young people, women and minorities could put the GOP on the defensive.

“When you raise the price of employment, guess what happens? You get less of it,” said House Speaker John Boehner (R-Ohio) last week.

A report released last week by the Center for Economic and Policy Research, however, shows that a modest minimum wage hike like the one proposed by Obama would have little impact on employment.

A higher minimum wage could lead to lower turnover rates, improvements in organizational efficiency at businesses, small price increases and wage reductions for higher earners. Such adjustments would allow businesses to pay lower-wage workers more without resorting to layoffs, according to the report.

“This is one of the most studied topics in economics, and the evidence is clear: modest minimum wage increases don’t have much impact on employment,” said John Schmitt, the author of the report. “An increase to $9.00 per hour would be hugely important for the workers getting it, but the idea that this would lead to less employment is just not supported by the evidence.”

In general, economists are not in agreement over the potential impacts that minimum wage increases have on employment, and opponents often point to the work of labor economists David Neumark and William Wascher, who recently argued that minimum wages pose a tradeoff of higher wages for some workers against job losses for others.