In his February State of the Union address President Obama proposed raising the minimum wage in order to provide low income workers with a living wage. There has been considerable disagreement about whether raising the federal minimum wage from $7.25 hourly to $10.10 an hour will help or hurt the economy.
One group (Republicans) maintains that raising the minimum wage will kill jobs. They theorize that employers will cut jobs in order to be able to stay in business and continue to make profits. In addition they believe this would reduce new jobs with many employers turning to automation thus avoiding paying live people to work. If employers are forced to pay a higher wage they may in turn raise prices making it more difficult for consumers to make purchases. In smaller businesses owners may opt to take on more responsibility themselves rather than pay others.
Democrats take the opposite point of view. Workers making more money are likely to spend more. Presently many families especially those of 3 or more, live below the poverty level. The added income would raise their standard of living. This will also reduce the amount of money the government now puts into social programs which might slightly lower taxes. In effect raising the minimum wage should stimulate the economy.
The real question here should be who will benefit from raising the minimum wage? With over 15% of Americans living in poverty any additional income would be an advantage on the surface. However we need to also take into consideration most of these families are receiving some type of government subsidy. This could be Temporary Aid to Needy Families, Supplemental Nutrition Assistance Program (SNAP or food stamps), housing assistance, help with childcare expenses, or other types of aid. Would the increase in pay be enough to take the place of these subsidies? If not, are they so much they would leave families without this assistance in a grey area where needs are not covered?
Personally I’m in favor of raising the minimum wage. For some it will take a little getting used to. It would also make sense if the government revisited TANF and adjusted requirements and income levels to accommodate those who fall into the grey area. Often those who apply for benefits require specific assistance such as childcare or food stamps but are forced to accept additional services. It would make much more sense to address each case individually; provide what is requested and needed. In addition this would motivate those who rely on assistance to move forward/ upward to self sufficiency rather than perpetuate dependency.
There is a great deal more to be considered when raising the minimum wage. We can only hope those in Washington think it through and do what’s sensible.