Obama, Congress & States Moving To Raise The Minimum Wage; Experts Argue Over The Impact

January 30, 2014  |  

During President Obama’s State of the Union address, he announced that he will raise the minimum wage for federally contracted workers through an executive order that will bring the hourly pay up to $10.10 from $7.25. According to the AP, the raise will only affect 10 percent of the total 2.2 million contracted workers and might not be renewed with those contracts come up for renewal. Nonetheless, security guards, housekeepers, and other low-wage workers can, and probably would, fight to hang on to and increase that amount.

This effort to raise wages is part of what President Obama called the “year of action.” Socioeconomic inequality will be a big focus.

“Those at the top have never done better,” the President said during his speech. “But average wages have barely budged. Inequality had deepened. Upward mobility has stalled.”

The President joins 10 states, including Arizona, Ohio, and Rhode Island, that have raised the minimum wage while Congress debates back and forth on the issue.

“That said, raising the minimum wage in and of itself can drastically raise the number of people affected. If the federal minimum wage grew to $10.10, suddenly not only the current minimum wage-earners (at $7.25 per hour) would be affected, but all of the $8 and $9 per hour workers likewise would slip below that bar and would need a raise,” according to US News“According to the Economic Policy Institute, a progressive economic think tank, 30 million Americans would get raises in this circumstances.”

The Economic Policy Institute has a petition on its website that has been signed, according to the site, by 600 economists, advocating for a $10.10 minimum wage.

“The vast majority of employees who would benefit are adults in working families, disproportionately women, who work at least 20 hours a week and depend on these earnings to make ends meet. At a time when persistent high unemployment is putting enormous downward pressure on wages, such a minimum-wage increase would provide a much-needed boost to the earnings of low-wage workers,” the petition says.

Still, there’s debate over the impact of this increase.

“It’s important to understand who’s earning the minimum wage. Very few people are raising families on the minimum wage alone—for instance, just nine percent of employees affected by the $10.10 number that Congress is discussing are single parents. By contrast, 60 percent of affected employees are either living at home with family and relatives or they’re a second- or third- earner,” Michael Saltsman, research director at The Employment Policies Institute, a nonprofit organization that researches issues surrounding entry-level employment, told us via email.

Support for minimum wage hikes is growing, but the debate over who will benefit — and who will benefit most — continues. This Washington Post story has a series of charts that break down the impact that a $10.10 increase would have on various demographics.

“But there’s no question that a large share of the American workforce earns wages well below $10.10 and would be directly affected as long as their jobs aren’t lost,” the article says.

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