The notion of raising the minimum wage has moved back into the national spotlight courtesy of U.S. President Barack Obama, who last week called for an increase in the federal minimum rate from the current $7.25 an hour to $10.10.
It's an idea the president last mentioned publicly in his State of the Union speech in February, when he called for raising the minimum wage to $9 by 2015.
Last Thursday fast-food workers in 100 cities brought still more attention to the issue by staging a nationwide walkout/protest to criticize the current minimum wage level and call for an increase to $15 an hour.
Opponents – including many conservatives – see higher minimum wage as harmful for business. It's a policy conservatives routinely attack, claiming that increasing it will force businesses to cut jobs and raise prices – hurting the very people it is supposed to help.
But raising the minimum wage would not only benefit low-income workers, it would stimulate the U.S. economy and save the government billions of dollars.
It's an issue that should have bipartisan support from across the political spectrum. The benefits of raising the minimum wage make at least as much sense from a conservative perspective as from a liberal perspective.
And, curiously enough, the conservative reasons for a minimum wage raise are the most compelling…
Venture capitalist Nick Hanauer, the founder of Second Avenue Partners, argues that raising the minimum wage is in fact essential to maintaining consumer demand.
"The fundamental law of capitalism is that if workers have no money, businesses have no customers," Hanauer wrote in a Bloomberg column in June. "That's why the extreme, and widening, wealth gap in our economy presents not just a moral challenge, but an economic one, too. In a capitalist system, rising inequality creates a death spiral of falling demand that ultimately takes everyone down."
The Benefits of Raising the Minimum Wage for Businesses
But several studies, as well as some conservative thinkers, say that's backwards…
For example, a 2012 study by the non-partisan think tank Demos on the effect of raising the minimum wage on retailers found that U.S. gross domestic product could actually get a $15.2 billion boost, that 132,000 jobs would be created, and that the retailers would enjoy as much as $5 billion in additional revenue.
About the Author
Dave has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.