Stakeholders in President Obama’s proposal in last week’s State of the Union address to raise the minimum wage from $7.25 an hour to $9.00 are predictably divided on whether doing so would force some businesses to layoff some employees in order to stay afloat.
One such opponent is Amity Shales, author of the new biography on President Calvin Coolidge called Coolidge, who argues unemployment does go up following mandated increases in the minimum wage. She suggests business tend to step up and raise wages to remain competitive.
Yet fears that raising the minimum wage will force employers to lay off workers are unfounded, argues Paul Krugman in his column in The New York Times today. “The minimum wage is one of the most studied issues in all of economics. U.S. experience, it turns out, offers many ‘natural experiments’ here, in which one state raises its minimum wage while others do not. And while there are dissenters, as there always are, the great preponderance of the evidence from these natural experiments points to little if any negative effect of minimum wage increases on employment.”
Krugman cites evidence of support last year for increasing the minimum wage by a majority of voters including Republican women, though not men. Concerns that a minimum age increase by Republicans in the house are not credible, Krugman maintains, pointing to a Lake Research study last year.
Meanwhile here in New York, Governor Andrew Cuomo is pushing forward with is proposed increase in the minimum wage to $8.75 (25 cents per hour less than the President’s proposal), though he said today that the dueling proposals need to be reconciled, the update New York news site Your News Now reported. “We now have to justify the federal law and the possibility and probably that it passes as a state law,” he said. “So that’s a little more complex, and we’re in the process of working through now.
Cuomo added they’re both on the same page on the need for the increase. “If you work full-time you shouldn’t be below the poverty rate,” he said. “If you work full-time you shouldn’t be poor, and if you work full-time you shouldn’t have to choose between eating and paying your rent. That’s why we have to raise the minimum wage.”
Why is this so important even if you, your family and close friends aren’t directly impacted by the minimum wage? Chances are you are it affects you more than you may realize. Though I’m not an economist, I believe upping the wage will do more good for business and the overall economy than harm in the long run. And more important, it’s the right thing to do.