Ask an expert: Time to raise minimum wage?

MSN Money columnist Anthony Mirhaydari discusses whether a hike is needed and how a change might affect the economy.

By MSN Money Partner Feb 18, 2013 1:44PM
President Obama proposed raising the minimum wage in his recent State of the Union address. The impact of such a move on employment and the economy generally is debatable. According to Anthony Mirhaydari, businesses are already worried about burdensome taxation and regulation, and corporate earnings are under pressure. However, there is evidence of an improving situation for the American worker. Employers have already cut headcount and raised productivity as much as they can; now, in order to sustain growth they must either increase wages or hire more workers. 

Mirhaydari cautions that it is difficult to come down strongly on one side or the other of the issue as "this is not a normal business cycle." 

 

Be sure to check out Anthony's new investment newsletter, the Edge, and his money management service,Mirhaydari Capital Management. A two-week free trial has been extended to MSN Money readers. Click the link above to sign up. Mirhaydari can be contacted at anthony@edgeletter.c​om and followed on Twitter at @EdgeLetter. You can view his current stock picks here. Feel free to comment below. 

 

504Comments
Feb 19, 2013 11:15AM
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I have a better idea, instead of raising the minimum wage, how about the government stop devaluing the dollar. That would help the poor out much more!!!
Feb 18, 2013 9:47PM
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This is very simple to understand what will happen if minimum wages go up. One, businesses will raise the cost of goods and services to cover the hike in wages. Two, you and i will pay more for it as cosumers. BUT, three----- read carefully, the minimum wagers will also pay more for these goods and services therefore, going nowhere. Again, Obama and the other liberals are idiots!
Feb 19, 2013 1:58AM
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Nobody is forced to work a minimum wage job. Stop wining and start a business, like go to your pawn shop and buy a lawn mower and edger and cut lawns, i did. It was my first business at 13 years old because my dad did not want to buy me a bike so, i did. By the time i wa 22 years old i had 5 trucks and trailers fully equiped with lawn equipment and an account of 3 apartments and 112 residential lawns and my mother was my bookkeeper who i paid a full salary to. I sold it for $185,000.00 and started a construction business with my brother and sold it after 17 years for $485,000.00 Stop complaining and get off your butts.
Feb 19, 2013 11:03AM
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Obama is very bright to make this suggestion.  Most people making low wages will rejoice that the democratic (actually socialist) President is trying to help them.  So they get more entrenched as democrats and will continue to vote that way.  But of course the big benefit is that if the minimum wage goes up, it makes far more people poor and increases unemployment.  So the socialist voter base increases even more.  Naivety is a wonderful thing for the voter base.  That is how Hitler got his solid base, right around the same time he started removing guns form the general population.
Feb 19, 2013 7:27AM
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why all the complaints?  if obama says all ok then all is ok.  why cant you obedient slaves listen to the master?  soon as the guns are gone your gonna listen, real close.
Feb 19, 2013 3:02AM
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It doesn't matter what employers raise the minimum wage to. They will simply counter that by reducing the number of hours, because they can't afford to pay it.  Then the workers suffer, perpetuating the cycle of poverty.  The only real solution is to learn a trade or skill that is in high demand and pays a decent wage say, $20 an hour or more.
Feb 19, 2013 1:02AM
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Do away with the minimum wage all together, the economy will dictate a "minimun wage". The idea of a minimum wage for the whole entire country does not make sense. Here in the town I live in you could make it on minimum wage being that there are plenty of $300-400 rentals, but in other parts of the country there are much greater prices to rent. One wage for everywhere is outdated!
Feb 18, 2013 9:22PM
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The Gov. has no business in establishing wages, if demand for workers are up wages go up, if demand goes down, wages go down, The Gov wants to stick their big nose into this, then it will surely be a screw up, 
Feb 19, 2013 1:42AM
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More than 95% of companies pay more than minimum wage now. Most minimum wage workers are in the 16-24 age range. Mostly in the food industry. And why would you want a national minimum wage that is the same in San Francisco as it is in Hazard Kentucky?

 

If you raise the 7.25 person to 9.10, then you have to rasie your $9 guy to $11. Then your $10.50 guy to $12.50. Now lets do this while we have been mired down with 4 plus years of 2% or less GDP. And what happens to the ice cream shop when he puts a 25% wage increase into his final product and has a $3.50 ice cream cone?

Feb 19, 2013 1:14PM
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It is like when i go to my local convenience store and see a line of poor people spending their entire pay check on lotto tickets and then they go home and call the government for more welfare because minimum wage jobs is not enough to buy food and pay rent and the liberal government workers say, no problem it's in the mail.
Feb 18, 2013 6:40PM
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What's never reported is how much taxpayers have to subsidize full-time workers with food stamps, low-cost housing, free school lunches, SCHIP healthcare for kids, etc.  If those things were NOT available, the employers would most likely have to pay more so that the worker would be able to survive and show up for work each day: otherwise, why does he/she need those things?  Consequently that extra money skimmed by the employer is an indirect form of welfare.  If you raise the minumum wage to $9 from $7.25, it will be the rich employer who has to reduce feeding off the taxpayer!  And in a fast-food restaurant, where there may be a crew of 8 plus a manager, if all 8 are making minimum wage and you raise it from $7.25 to $9, it will add (including extra employer FICA contributions) about $120 in costs for an 8 hour shift.  That's about 1% of the typical take.  So you'd have to raise the price of a $5 burger to $5.05 to pay for it.  And by the way, McD's avg. worker may be making $7.76 and hour, but cousins of mine who own four McDonalds in northern Maryland have been paying $10/hr or more since before the recession.  They say it results in better workers and fewer headaches.  And they still made enough to buy a minor league baseball team.
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I would think this so called economist would understand the consequences of raising minimum wage again. First it doesn't help anyone who is making minimum wage because prices of goods go up the cost of living goes up and minimum wage earners are in the same boat they were to begin with, at best. Second the increased cost of living negatively impacts all other wage earners because they don't get a raise, but suddenly have to spend more on the cost of living. Third just look at how unemployment increased with the last round of increases, employers were forced to decide who to let go just to stay afloat in many cases and that meant that the people left were having to shoulder a heavier burden. In other words it doesn't help anyone and actually hurts many. Unfortunately we have so many people who lack math skills and common sense and they just see a bigger number without actually connecting any dots.
Feb 26, 2013 10:24AM
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Proof that this money expert is no economist (or much of an expert): "Employers have already cut headcount and raised productivity as much as they can; now, in order to sustain growth they must either increase wages".  Raising wages does NOT increase productivity - nor does it help sustain growth.  Do you become more talented simply by getting a raise?  No - of course not.  But - if you gain skills, you can get a raise because you're more valuable.  Cart before the horse, Mr. Mirhaydari.  You can not legislate productivity.  The Soviet Union tried - but it can't be done.
Feb 18, 2013 4:35PM
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I work for close to minimum wage and do not agree we should raise it. Why? Because it would create many unintended consequences that would devastate the economy even more. 
Feb 19, 2013 12:32PM
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Raising the minimum wage increases tax revenues.    Duh.   Government has their motives.
Feb 26, 2013 5:37AM
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Everyone makes the comment that if you raise minimum wages prices will go up.  I have news for you, prices go up whether you raise wages or not.  Gas has went up, food has went up, utillities have went up, all without a minimum wage increase, so that those who work minimum wage can afford less and less of the basic necessities of life.  Raising the minimum wage isn't designed to make workers rich, it's designed to make the basics of life affordable, so that you can keep a roof over your head and food and power WITHOUT having to go on the dole.  Of course, if you'd rather have more and more people on the welfare rolls because they can't earn a living by working, than by all means, leave the minimum wage stagnant and let the prices of the basics keep on increasing.
Feb 18, 2013 3:37PM
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My first regular job was at a hardware store, I made $1.30/hr adn was elated, minimum wage was $1.25. Gas was 19.9cents/gallon so even though my car only got 8 miles/gallon I could cruze all night on Fridays for a buck.

My adult co-workers were raising kids at !.65/hr. However that $1.25 wage in 1965 would be something like $11.00 today, the $1.65/hr would be $14.50. Is Obama really asking too much? Or are employers being too gready?

Feb 26, 2013 9:39AM
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Raising the minimum wage sounds great, but does nothing for the people currently earning minimum wage.  If there is a gain, it is short term.  In order for a buisness to pay its bills, it will raise the prices of goods to offset the cost of the increased wage.  The minimum wage earner will be right back where they started.  Sure they make more money, but the value of their dollar is the same as before the wage increase.  Meanwhile, the middle income earners will see a decrease in the value of their dollar since the wage increase is not affecting them.  The rich can afford any increase, so they are minimally affected.  in the end, the middle income earners are the group that is affected the most and it is a negative affect..
Feb 19, 2013 8:04AM
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You are using math to calculate an increase of a burger and leaving out the entire chain of the supply. The economics of a business doesn't work that way. You are looking at the wage increase for the server at McD's but you need to look at the wages of of everyone backwards from there. Every business takes a little more for their part and by the time you get that burger it is a buck more.

Feb 18, 2013 4:59PM
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With all of the taxes and everything involved with the new health care act.  He is asking too much.  Workers deserve a raise.  Many do not make enough to pay for basics, but the problem with raising min wage is that when it raises, so does the cost of everything else that is already too high priced and raising without the min wage raise.  Need to find a way to control cost of living.
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