$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.

By Bruce Kennedy Feb 13, 2013 2:31PM

Image: Grocery clerk (Corbis/SuperStock)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.


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115Comments
Feb 13, 2013 2:48PM
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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!

 

 

Feb 13, 2013 2:50PM
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Raise the wage, and the costs of all goods and services rise to pay the additional costs. Inflation is on its way and everybody is going to get slammed. the value gets devalued and the government wins and everyone who has saved for retirement loses.
Feb 13, 2013 2:44PM
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Minimum wage jobs were never intended to be careers. It is a sad state of the union so many are stuck in those jobs now. If the government refuses to put fair trade practices and fair tariffs in place there will be few good jobs added. You don't even hear them discuss it.
Feb 13, 2013 2:50PM
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Hows raising min wage going to help business will have to raise cost of goods to off set increase consumer will ultimate pay
Feb 13, 2013 3:07PM
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A higher minimum wage will cause the cost of goods and services to go up.  So then the cost of living will go up, so the minimum wage will have to go up again, and so on and so on.  People making minimum wage will never be above the poverty line, the line will just keep moving up over them.
Feb 13, 2013 2:57PM
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Way to go Mr. President - by raising the minimum wage from $7.25 to $9.00, the tax rate for a married filing jointly couple goes from 10% to 15% for ALL income.  Yes, if they have 2 children and they take standard deductions the rate goes down to 12% but the fact remains - they will pay more tax on ALL their income.  I guess the administration has to raise the revenue for all the entitlement expansions stated last night somehow so they will give and take from the low income earners at the same time!  
Feb 13, 2013 4:22PM
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"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"

 

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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.

Feb 13, 2013 4:02PM
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Don't be fooled Obama knows well the pressures are to lower wages.  In order for jobs to return to America wages must decline to $3.50 or so per hour in order to compete with China, Korea, or Mexico.  He knows only too well the reality of the arbitrage going on right now.  Obama is an adept politician who often says exactly the opposite of his intention, thereby giving his opponents zero wiggle room.  The New World Order requires American wages to be lowered to allow manufacturing to be transfered across international boundaries freely.  He knows it, the Internationals know it , and Congress knows it, but poor people don't and if they did know his true intentions they would likely revolt.  Using inflation and high unemployment American wages will suffer and continue lower until the arbitrage is complete.  Anything other is pure Poppycock.  He also just last month met with International CEO's and began discussing a new Territorial tax whereby the largest and richest Corporation would have income taxes waved on their overseas profits.  As a group they already have an estimated $3 trillion in cash.  What the heck do they need with more tax breaks?  If you think I know not of what I speak google territorial tax discussions.  Politics has become the career for  those who can tell the biggest lie, who can confuse the best, and who are most able to surround themselves with sociopaths who will offer support and not let out the truth.  Like you know the transparency thing..
Feb 13, 2013 3:42PM
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$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.

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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.

Feb 13, 2013 4:45PM
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Why not just raise the minimum wage to $100 and hour?   This way business can layoff all those making less than that now.

PROFITS have to be able to support whatever wage scale there is.  Government TAXES hold down profits, thus holding down all wages.  

LOWER TAXES and create real sustained demand.  Let the people that earn the money keep it and spend it.   Government needs to be weened from the teat of private enterprise.   
Feb 13, 2013 3:32PM
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Raise the Minimum Wage ???    Hummm??  I think the min wage is and should be low & keep lower than even a unskilled laborer . As it is, The min wage people haven't put much effort into learning  a skill or trade to try and improve themselves. I don't buy into this crap that they didn't get a fair shake in life. Everybody has stumbled across somebody somewhere through lift that could have taught them or at least the need to improve themselves. As it is the parent that is making min wage is teaching those two kid something !!  Right??  Like it's OK to sit on your lazy 
A-Keaster and wait for your newly elected to give you another free ride on the hard working people's coat tails who have paid the price of working their way up the money train.. That's Right go ahead and give it to them.  But when  the job market goes down the tube after all these great new Tax's law's, health care laws, Min wage law's  & on & on .    We should all be OK,! RIGHT?  Because we all know our great minds in office have a plan to save us...Right??   
Feb 13, 2013 3:28PM
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The answer to headline is not so clean cut.  For those employers that are paying $7.25 because they know they can get away with it, then it would help the economy for them to pay more per hour .  For those employers that can't afford to pay more than $7.25, well, I guess they'll be letting go of some of their employees.
Feb 14, 2013 10:43AM
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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. 

Feb 13, 2013 5:43PM
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Typical democrat moochers on here clamoring for the minimum wage to be raised. Why shouldnt it be $20 an hour, $30 an hour. Why don't we just have one pay grade for the entire country ? You get $xx whether you work or not, the same pay regardless of education or skills? The same pay regardless of years of experience, regardless of responsibility, regardless of your productivity.  Isn't equality grand?
Feb 13, 2013 5:11PM
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Raising the minimum wage to $9.00/hr from $7.25/hr will be a set back to all those that have worked hard to advance from the current minimum wage to $9.00/hr or more. If you currently earn $9.00/hr you will be back to the bottom of the growth ladder at work you have been trying to climb. All new employees, with no training, will be making the same money as you. Also, just as in the past when the minimum wage increased the economy and business will absorb that $1.75/hr increase as the cost of living increases will start chasing your percentage of wage increases. 
Feb 13, 2013 4:16PM
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How many minimun wage earners are not HS dropouts, dumb as peanuts, or HS students?
Feb 13, 2013 4:19PM
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How would forcing business to layoff all those making under $9 help the economy?   

That is what most business' do every time the minimum wage is raised.   Worse still, unskilled workers will have a much harder time finding work.    

Minimum wage laws do not generate real demand.  They do not create jobs.  They in effect slow the economy, just like tax increases do.

If you want to stimulate the economy, SLASH TAXES and government SPENDING/BORROWING/PRINTING.  That puts money into the hands of those that EARN it to spend creating REAL sustainable demand.

What does the government currently produce that you would want to buy, without the tax collectors bayonet in your back?   Answer, NOTHING.   Just about everything can be provided by the private sector, is higher in quality, and cheaper than the government product...

Government needs to shrink.  Mr. Obama start SLASHING!
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What planet is this President from?   He says the same ole, same ole, over and over and over and over and over and over again.   It you do the same thing over and over again and expect a different result, you are considered crazy.   Do not let him own a firearm.  Can a President be Impeached for being crazy?
Feb 14, 2013 9:54AM
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NO WAY. Nothing will kill this economy faster.
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