Minimum Wage Proposal Divides Business Owners, Economists

Friday, February 15, 2013

help wanted, sign, jobs, economy, employment (B.J. McCray/flickr)

Speaking at a trucks parts plant in Asheville, North Carolina earlier this week, President Obama repeated a call he made in his State of the Union address to raise the minimum wage to $9 per hour by 2015. "I believe we reward effort and determination with wages that allow working families to raise their kids and get ahead," he said.

The president's proposal also involves linking the minimum wage rate to the cost of living to make future increases kick-in automatically. That plan, however, has been met with opposition. Republican John Boehner asked: "At a time when the American people are still asking the question, 'where are the jobs?' why would we want to make it harder to hire people?"

Doug Pettigrew is owner of the Michigan-based Electronic Brain Solutions, a small business that offers computer support in Detroit. He says that while he's sympathetic to the struggles of working families, it won't be easy for him to increase wages for all of his workers.

Arin Dube, assistant professor in economics at the University of Massachusetts Amherst, researches the minimum wage. He says it's simply not true that raising the minimum wage increases the unemployment rate.


Arin Dube and Doug Pettigrew

Produced by:

Mythili Rao

Comments [5]

CK from Yorktown

I'm all for raising the minimum wage, getting people off "earned income tax credit" meaning, the redistribution of wealth and causing a hike in prices at the fast food joints that will need to raise prices to cover the rise in their costs. Maybe we'll not have "value menus" which promote cheap eating of not so good for you food. Maybe that burger on the dollar menu should cost $4. But watch how fast politicians decide we need to raise the level for people who get that "tax credit" to cover those on the new minimum wage.

Feb. 15 2013 03:52 PM

These arguments are not convincing. So, since Apple's profits are at an all time high, small businesses can afford to pay more for a receptionist? Apple will continue to outsource, and the small business may be forced to find a way to do the same or replace the receptionist with an answering machine.

Feb. 15 2013 03:49 PM
dlm from Brooklyn

The jobs paying minimum wage at not meant to support families. Jobs at McD's are for when you are in school, not when you are 40 supporting a family.

Was this supposed to present both sides? Someone who really really wants minimum wage hikes versus someone who only really wants them. Why even go through the charade at this point.

Feb. 15 2013 12:59 PM

For the minimum-wage workers that we are really worried about (single moms, parents, heads of household) the EFFECTIVE minimum wage is already more than $9 an hour.

That is because of the Earned Income Tax Credit. Wherein low-wage workers who file tax returns don't have to pay taxes -- they actually get a refund check from the federal government that is not insignificant. It boosts their effective annual income well into the range that minimum wage increase proponents want.

From the Wall Street Journal, just yesterday:

"Republicans have supported this tax credit because eligibility is based on working and earning income. Democrats hail the EITC because it's refundable, meaning that a low-wage family without any tax liability nevertheless can file a tax return and get a check from the government. In a state such as New York, a single parent raising two children on the minimum wage would see their annual wage of $15,080 jump to $21,886 with the EITC, for an effective hourly wage of $10.52."

Feb. 15 2013 12:49 PM
Peg from Southern Tier NY

The minimum wage is a tax credit for businesses. When employees are not paid a LIVING WAGE, they are forced to access government taxpayer funded programs for the poor - food stamps, medicaid, welfare, wick, heap....
Plus these same low paid workers collect tax payer funded earned income credit to make up for more of their inability to merely pay for what is necessary to live. The minimum wage should be a LIVING WAGE - in upstate NY that's about 12.00 with benefits and 15.00 self employed. Have no idea what it would be in expensive NYC.

Feb. 15 2013 09:51 AM

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