In his State of the Union address Tuesday night, President Barack Obama urged Congress to raise the minimum wage from $7.25 to $9, saying the move would reduce poverty and stimulate the economy.
"Tonight, let's declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty, and raise the federal minimum wage to $9 an hour," President Obama said. "This single step would raise the incomes of millions of working families. It could mean the difference between groceries or the food bank, rent or eviction, scraping by or finally getting ahead.
"For businesses across the country, it would mean customers with more money in their pockets. And a whole lot of folks out there would probably need less help from government."
Unions and labor advocates are among the chief supporters of an increase in the federally mandated minimum wage.
"The president said he was putting jobs and the economy front and center tonight, and that's exactly what he did by calling for a minimum wage increase," Christine Owens, executive director of the National Employment Law Project, said in a statement.
"A higher minimum wage is key to getting the economy back on track for working people and the middle class. The president's remarks also cement the growing consensus on the left and right that one of the best ways to get the economy going again is to put money in the pockets of people who work."
But opponents of raising the federally mandated minimum wage have a decidedly different view of the president's proposal.
Would Raising Minimum Wage Cost Jobs?
Critics argue increasing the minimum wage would raise businesses' costs and, in turn, reduce the number of employees they could hire.
"I've been dealing with the minimum wage issue for the last 28 years that I've been in elected office," House Speaker John Boehner, R-OH, told reporters. "And when you raise the price of employment, guess what happens? You get less of it."
The minimum wage increase proposed by President Obama would eliminate at least 467,000 jobs at a time when the country already has a 7.9% unemployment rate, according to research by economists at Cornell and American Universities published in the Southern Economic Journal.
The Employment Policies Institute, a fiscally conservative organization that tracks entry-level employment, has found in multiple studies minimum wage increases have led to job losses and failed to reduce poverty or stimulate the economy, Michael Saltsman, research director at the Employment Policies Institute, told Fox Business.
Saltsman said President Obama's proposed minimum wage hike would have the same effects.
"Using a minimum wage increase to create jobs is like using an oven to create ice cubes - it just doesn't work," Saltsman said, adding that President Obama "needs to lower barriers to hiring, not raise them."
And Federal Reserve Vice Chairwoman Janet Yellen, an Obama supporter who opposes the minimum wage increase, said the proposal "wouldn't address one of the big problems holding back the economy, which is tepid spending and investment by households and businesses."
In the past, raising the minimum wage has not helped reduce unemployment.
Raising the minimum wage in 1980 and again in 1981, for instance, did not prevent the unemployment rate from increasing to 10.4% by the start of 1984.
And not increasing the minimum wage doesn't appear to have affected the unemployment rate.
From 1997 to 2007, there was no increase in the minimum wage and overall unemployment stayed below 5% while youth unemployment (ages 16-24) remained around 10%.
Now critics worry raising the minimum wage again will slow down our fragile economy.
"A minimum wage hike right now would be one more factor driving up costs for employers and creating headwinds for job creation, especially among the small businesses that create most of our nation's new jobs," David French, senior vice president for
government relations at the National Retail Federation, said in a statement.
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Why Minimum Wage Represents Maximum Stupidity - Forbes:
Why Raising The Minimum Wage Kills Jobs - FoxBusiness:
Higher Minimum Wage, Higher Unemployment? - The New York Times:
Raising Minimum Wage Would Ease Income Gap but Carries Political Risks
"Obama's re-election adds and retracts nothing to American "civilization". The United States is a declining power economically (despite the exploitation of shale gas) and strategically. It is just the centre of an Empire, and Proponents of this "Empire" strive in vain to delay the collapse. Economically, it continues to borrow and the U.S. Federal Reserve is also currently the only to buy U.S. Treasury bonds by creating more dollars, which will inevitably lead to the collapse of the dollar. Militarily it continues to seek to undermine the position of the other regional powers such as Russia. We can see today in Syrian clash that Russia and China defend conceptions of respect for authority while American and Westerners support extremist and dangerous insurgencies. These uprisings brought Islamism to power in Tunisia, Egypt, and Iraq, resulting in anarchy and ethnic bursting. If the West continues to accept in its midst millions of Muslim immigrants and to support Islamists in the Arab-Muslim countries, the future of the entire block looks bleak. Its very survival is at stake."
Well, given that a minimum wage increase will now, as it always has, reduce the prospects for black youth employment more than any other group, I have to conclude that Obama is a racist. And this is hard core racism…the deliberate denial of opportunity.
Before we had wage minima, black youth unemployment was LOWER than white youth unemployment and youth unemployment in general was much lower than it was after the laws were passed. Milton Friedman laid the problem with wage minima out in chapter and verse 50 years ago. It's an irrefutable argument. Has no one learned?
Do we want young kids and others with minimal skills to be employed at a wage level commensurate to those skills and have some chance at upward mobility or do we want to shut them out?
Do we want to force employers to automate or get by in other creative ways with fewer staff in order to survive? This is crazy.
The President isn't stupid from an IQ perspective. He must know the problems with the minimum wage. For god's sake, even Janet Yellen does! And he doesn't care. All he cares about is scoring political points.
Is it better to be employed at $7 an hour if that's what your current skills are worth to employers or unemployed at $9? That's what it comes down to.
But hey, the unions want it, because you might be able to have three $7 an hour folks do the same amount of work as one $23/hr union guy using a machine. That won't work with three guys at $9/hr.
As if that extra money to pay the additional $1.75 doesn't come from somewhere. It comes from the pockets of customers and thinner margins for business owners. Actions have consequences. We'll all pay for this stupidity in the form of higher prices AND higher unemployment. As usual, the government comes in the guise of helper only to inflict more damage. But try to explain that to somebody who knows nothing of economics, because he or she went to a publik skool. That person just wants a fatter paycheck. Can't blame 'em. Something for nothing…who doesn't want that? Never mind the consequences.
Just give people stuff you've taken from other people…in this case an extra $1.75 an hour…or borrowed to get…until you can borrow no more and other people are squeezed dry. Thanks Mr. O. Great plan. Thanks for nuthin'.
What did you expect from this Socialist imposter?
OMG…must read from Jeffrey Tucker. Brings the human side of this home in a big way.
http://lfb.org/today/
i am sooo with "fallingman",
and many companies, and even some wild life organizations just
cannot pay pple at $9.00 a hr. because, they can't generate enough cash for all the other, reasons. ( i even tried to be a small business entreupreneur, so, i know. ) am sure they r not being mean to pple to pay them low hourly that way.
it is always better to work for some job experiences , and to show employer u r serious about working, than to Not able to get in thru the small company's door because there r so ffew job openings, & because the higher minimum wage forces the company / organizations to cut corners this and that.
it is Easy to see.