To Lift Minimum Wage or Not to Lift It, That is the Question

The Obama administration has created a Hamlet-like to do or not to do situation for Congress; legislators can either translate the President’s call for an increase in minimum wage into law and potentially cause further unemployment, or keep the pay level at $7.25 and risk leaving young people and minorities further behind in the economic recovery.

Economic experts are split on the potential effects that raising federal minimum wage to $9 per hour could have on workers. In his State of the Union address, Obama proposed a $1.25-per-hour increase, along with a plan to index minimum wage to inflation, and supported it with the argument that “employers may get a more stable workforce due to reduced turnover and increased productivity.” But this may not be the case.

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The Wall Street Journal has taken issue with an assertion made by the White House that “a range of economic studies” show “that modestly raising the minimum wage increases earnings and reduces poverty without measurably reducing employment.”

Comparatively, many economists have argued that raising the minimum wage will hurt low-wage workers because employers will have to cut back payrolls due to increased labor costs. The White House’s claim — with its heavy use of inexact wording like “modestly” and “measurably”  – could hide a whole host of economic problems that stem from the higher wage…

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