$9 minimum wage: Jump start or job killer?
Business leaders seem mixed about the president's State of the Union call to raise the federal baseline wage.
The media and blogosphere lit up Tuesday night after President Barack Obama's call for Congress to raise the federal minimum wage from $7.25 to $9 an hour -- and to tie the minimum wage to the cost of living.
"Even with the tax relief we've put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong," he said in his State of the Union address.
Florida Sen. Marco Rubio, who delivered the Republican response to the president's speech, said mandating a minimum-wage hike won't help the economy or financially struggling Americans.
"Minimum-wage laws have never worked in terms of having the middle class have more prosperity," Rubio said during an interview on CBS This Morning. "Let's have a debate about growth and what generates growth because a minimum-wage law. . . is not the way to do it."
Along with the expected political opposition, the White House also is getting push-back from parts of the business sector, which sees a minimum-wage rise as a potential job killer.
"Hiring is already slow, arguably because of uncertainty over the impact of the health care insurance law,” David Black, CEO of the Harrisburg, Pa., Regional Chamber and Capital Region Economic Development Corporation, told PennLive.com.
"I think a jump in minimum wage could cause job growth to actually slow nationwide," he said, "because it is [an] additional government mandate on businesses -- on top of health care and other regulations -- that businesses, particularly small businesses with limited capacity, must comply with."
Tim Mason, with the Rochester, N.Y., Small Business Council, says that while employers want their workers to earn more, they can't absorb an increase in labor costs.
"Think of your own household," Mason said in an interview with WHEC-TV. "If you found out tomorrow that your expenses were going to go up, something is going to have to give. What could that be? Hiring minimum-wage employees."
But New York's governor has already proposed a minimum-wage raise in his state, and some business leaders there approve.
"Raising the minimum wage will put more money in the pockets of workers who most need to spend those dollars," Darius Ross, managing partner of D Alexander Ross Real Estate Capital Partners and a member of Business for a Fair Minimum Wage, wrote in an op-ed piece on StarGazette.com.
"It will boost consumer spending at local businesses across the state. And nothing drives business owners like me to hire additional workers more than increased consumer demand."
Ross also cited data from the nonpartisan Economic Policy Institute, which says a proposed minimum wage increase would benefit 21 million U.S. workers and increase wages $22 billion by 2015.
More on moneyNOW
Let's see, raise the min wage so businesses will raise prices so, raise the min wage again so businesses will raise their prices so....
In the mean time an entire generation of seniors can watch their purchasing power erode because they are on a fixed income and their savings provide no income because the Fed is manipulating interest rates to zero.
Our government is run by fools and the jackasses who elected them are getting exactly what they deserve!
"Even with the tax relief we've put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong"
Solution... don't have two kids if you don't have a job good enough to support them. This isn't hard. Minimum wage is not designed to keep a family with two kids above poverty. I honestly don't know many places that pay minimum wage. I have been paid minimum wage since I was 16 or 17. By the time I graduated high school, I was working at a grocery store, had EARNED 3 raises, and was making about $1/hr over minimum wage. But I was a high school punk not trying to support a family. All of my jobs in college paid anywhere from $7.50/hr to $15/hr then I started paid internships and got a degree and a job that pay more than that. The only way you are making minimum wage is if you work at a job that requires no special education, training, skill, etc. Even then, most places pay better. I've seen ads at a local McDonalds that offered pay above minimum wage. I think this whole raising minimum wage is way over blown. Other than high school kids and maybe ILLEGAL immigrants, very few people make minimum wage.
Even if you jack up minimum wage, it isn't going to help any. All it does is drive up the cost of everything even more than inflation already does. Take your local McDonalds and lets say they do pay everyone minimum wage. You have an average of 10 people working at any point * $1.75/hr extra * average 16 hrs/day of business * 7 days a week * 52 weeks a year = $101,920 extra in labor. Do you think they are just going to give up that $102,000 PER restaurant and call it good? Not a chance. They are going to raise their prices. Who eats at McD? A lot of people but especially poor people that can't afford decent food. Now all of a sudden they have to pay more. Repeat that across the board at any restaurants, grocery stores, etc where a rise might impact employee pay. Great they make $9 instead of $7.25/hr but their BUYING power hasn't changed so what good did you do? NONE!
If you want to make more than minimum wage, go get a skill or education that will get you a job that pays more than minimum wage.
$7.25 to $9.00 is almost a 25% increase. What about all those people who after 5 years of hard work and raises finally got to $9.00/hr. Suddenly they are back to minimum wage, because I'm certain they won't get more. Employers won't have anything left over.
The President's proposal to increase the minimum wage is for political gain only. Any government mandated wage increase ends up lowering job availability for the less skilled workers. Such action encourages companies to either replace lower skill workers with automation or hire more skilled workers and firing the less productive worker. Wage rates are determined by supply and demand. In short as the supply gets larger the wage goes lower.
In early 2007 congress passed a 3 step increase in minimum wage with the first increase to $5.85 starting July 24, 2007, the second on July 24, 2008 and the third to $7.25 on July 24, 2009. What has happened to the job market after these government mandated wage increases? The way to increase wages is for a worker to either increase their skills or work harder at producing more per worker hour.
Let's see. I have a small business with 20 part time employees working at 7.25/hr. and working 25 hours a week. So I take them to $9.00/hr. 20 x 25 hours = 500 hours per week x the additional 1.75/hr increase in minimum. 500 hrs x 1.75 = $875 per week added costs, plus the payroll taxes brings me to about $1400 per week added costs x 52 weeks = $72,800 annually. I don't know many business who could add that cost to their business without raising prices or cutting back employees. Just another great idea from our government.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The stock market ended the Wednesday session on a mixed note. The tech-heavy Nasdaq displayed relative strength, climbing 0.4%, while the S&P 500 added 0.2% with five sectors settling in the green. For its part, the Dow Jones Industrial Average (-0.2%) spent the entire session below its flat line.
Equities started the midweek affair on a rather unassuming note in the absence of market-moving news or economic releases. With those pieces missing from the equation, ... More
More Market News
4 analysts downgrade the stock the day after a disappointing quarterly report.
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'