Supporters say that raising wages would address growing inequality between the rich and poor as the nation continues to recover too slowly from the Great Recession. Opponents say pay hikes would mean lost jobs and could slow a fragile recovery.
PROTESTS: Fast-food workers strike for higher wages
A bill, backed by President Obama, to raise the federal minimum hourly wage from $7.25 to $10.10 by late 2016, has stalled in Congress due to Republican opposition.
But seven states have passed legislation this year to raise the minimum wage. Four have approved increases to at least $10.10 an hour — Connecticut, Maryland, Hawaii and Vermont. Three others — Minnesota, West Virginia and Delaware — have passed smaller increases.
Proposals to increase the minimum wage have been introduced in at least 30 other states, according to the Associated Press.
Cities are also taking action. San Francisco, Santa Fe, San Jose and Washington are among cities that have voted to increase the minimum wage above the proposed $10.10 federal level. Others are weighing increases, including New York, San Diego and Portland, Maine. Seattle is considering setting the nation's highest minimum wage — $15 an hour, which would match what the striking fast-food workers are seeking.
Proponents say a minimum wage increase would bolster an economic recovery that has mostly benefited the wealthy who own stocks even as job gains have been dominated by low-wage sectors. Low-wage industries such as restaurant and retail accounted for 22% of jobs lost in the recession but 44% of jobs added in the past four years, according to a recent study by the National Employment Law Project. Mid- and high-wage sectors, meanwhile, still have far fewer jobs than they did before the recession.
"The! economy has not been working for most workers," says David Cooper, economic analyst at the left-leaning Economic Policy Institute. "Most people are still struggling."
The federal minimum wage was last raised in 2009, and increases in recent decades have not kept pace with inflation, Cooper says. The current $7.25 federal minimum is 27% below the 1968 rate after accounting for inflation.
An EPI study found that raising the minimum federal rate to $10.10 would raise pay for 28 million workers. Those include workers earning $7.25, others earning from $7.25 to $10.10, and some paid $10.10 or slightly above who would benefit from a higher pay scale.
"It's not going to drastically change lifestyles, but it's the difference between being able to afford a new car payment and moving into a better apartment with an extra bedroom for your kids," Cooper says.
The wage increases would pump an additional $22 billion into the economy, Cooper says, noting that low-wage workers tend to spend most of their paychecks, while higher-wage employees save more.
But Michael Saltsman, research director for the Employment Policies Institute, says minimum wage increases would force businesses to lay off workers or hire fewer people.
"When their costs increase, they either have to pass them off through higher prices or produce a product or service at a lower cost," Saltsman says. "That means doing it with fewer workers."
Fast-food restaurants, he says, would be more prone to replace employees with new technology, such as touch-screen ordering devices.
A study released in February by the Congressional Budget Office found that boosting the federal minimum wage to $10.10 an hour would lift 900,000 Americans out of poverty but reduce employment by about 500,000 workers.
Cooper notes that the report analyzed other studies of minimum wage increases and that more recent studies have found minimal job losses.
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