Thursday, April 26, 2012

The Federal Minimum Wage - the 'Other' Stimulus

With all the talk about how to stimulate the economy, one that hasn't been tried, but which is beginning to be discussed in a number of states (among them New York, New Jersey, Connecticut, Illinois and Massachusetts. Washington State's minimum wage is already $9.04) is a raise in the minimum wage. The last hike in the federal minimum wage to $7.25, was in 2009.  

Yet, according to 'Working Economics' the direct and indirect benefits could mean surprising and significant benefits to the nation's economy. A bill offered by Iowa Senator Tom Harkins would raise the federal minimum wage to $9.80 per hour.

 "...increasing the federal minimum wage in three steps to $9.80 per hour, as described in the Harkin bill, would raise the wages of 28 million Americans. About 19.5 million workers whose wages are between the current minimum and the proposed $9.80 rate would be directly affected. Another 8.9 million whose wages are just above the proposed minimum would also see a pay increase through “spillover” effects as employers adjust their overall pay scales."

"In a historical context, the increase proposed by the Harkin bill is long overdue. As John Schmitt and Janelle Jones at the Center for Economic and Policy Research explain, the real value of the minimum wage is far below its historical levels, despite the fact that the low-wage workforce is older and better educated than ever before. Congress has had to raise the minimum wage 17 times since its peak value in 1968 in order to combat inflation. Indexing the minimum wage, as 10 states have already done, would fix this problem once and for all."

You can read the rest of the article here...

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