The Costs and Benefits of a $9 Minimum Wage
Posted at 1:45 p.m. on Feb. 13
President Obama announced in his State of the Union address that he will push to gradually raise the federal minimum wage from the current $7.25 an hour to $9.00 an hour by 2015, and to provide automatic cost of living adjustments. But what is the impact of this increase on workers and businesses? The answer isn’t so straightforward.
CNN Money: “Some 18 states plus the District of Columbia have rates above the federal level… And 10 states automatically increase their minimum wage rates annually to account for inflation. Were the rate to rise to $9, a full-time minimum wage worker would earn roughly $18,000 a year, which is still below the poverty level for a family of four.”
New York Times: “The White House said that the move would have profoundly positive effects for low-income families without unduly burdening businesses or raising the unemployment rate… By making employees more expensive for companies to hire, some economists argue that higher minimum wages increase the unemployment rate.”
“The White House said that the $1.75 increase in the minimum wage would be enough to offset roughly 10 to 20 percent of the increase in income inequality since 1980.”