In September, California’s legislature approved a bill raising the state’s minimum wage from $8 an hour to $10 an hour, becoming the first state in the nation to surpass the double-digit minimum wage threshold.
But it looks like California won’t be the last. On November 19, the Massachusetts Senate voted to raise the state’s minimum wage from $8 an hour to $11 an hour. In addition, 12 other states have implemented minimum wage increases as well.
At the federal level, President Obama recently called on Congress to raise the federal minimum wage from $7.25 to $10.10 an hour, which would represent the first change to the federal minimum wage since 2009 and the largest increase in history. Thirty-one states adhere to the federal minimum wage.
Clearly, the push to raise the minimum wage is gaining momentum. But is it the right move for businesses, workers and the economy overall? Well, it depends on who you ask.
Here’s what proponents of raising the minimum wage are saying:
- A person who works full time earning the federal minimum wage would make $15,080 a year before taxes, which is just barely above the poverty level. A family of four with two working adults earning minimum wage would be living below the poverty level.
- By putting more money in people’s pockets, there will be more spending in the economy.
- Inflation rises every year, but the federal minimum wage has been raised just three times in the last three decades.
- The federal minimum wage would need to be $10.74 in order to account for inflation over the past 40 years.
Conversely, opponents of raising the minimum wage say doing so can actually hurt the economy. Here’s why:
- A higher minimum wage makes it more expensive to hire unskilled and lower-skilled workers, and many companies will pass the costs onto consumers.
- Companies will be forced to hire fewer workers in order to account for the increased costs, which will cause a spike in unemployment.
- The competition for minimum wage jobs will intensify. As a result, teenagers and younger workers will lose out to more experienced candidates, thereby robbing them of opportunities to gain experience and enter the workforce.
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