A lot of controversy is swirling around the President's endorsement of raising the federal minimum wage to $10.10 an hour. Let's have a look at this issue.
Last month seven Nobel prize-winning economists and four former presidents of the American Economic Association, along with more than 600 other economists, signed a letter to Congress urging passage of the $10.10 wage floor. Why would they do that? Here's what they had to say:
"At a time when persistent high unemployment is putting enormous downward pressure on wages," the letter said, "such a minimum-wage increase would provide a much-needed boost to the earnings of low-wage workers."
A bill by Rep. George Miller (D-Calif.) and Sen. Tom Harkin (D-Iowa) is what Obama openly supported in his State of the Union address. The bill would raise wages for 17 million workers directly and indirectly benefit 11 million near-minimum workers who'd probably be given raises to preserve pay ladders, estimates the Economic Policy Institute.
Conservatives and other critics cite a Congressional Budget Office report saying the raise would possibly result in a loss of around 500,000 jobs, but this is cherry picking. The report also said that the raise would add $31 billion to the paychecks of some 24 million low-wage Americans and effectively lift 900,000 out of poverty.
Something we should all consider is the fact that the $1.60 minimum wage mandated in 1968 had more buying power in inflation-adjusted dollars than the $7.25 we have today.
As the President stated so well, no one who works full time in the world's richest nation should have to live in poverty, relying on numerous government benefits for survival. A 2013 Congressional Budget Office study found that the federal government gives about $8,800 per household in annual assistance to the lowest fifth of households by income. The proposed 40 percent boost in the minimum wage can reduce that level of government giving. Let's give our low-wage workers a raise.