A raise in minimum wage

A waitress at Osha Thai Restaurant carries plates of food along with bowls of jasmine rice in San Francisco, Calif. President Obama proposed a minimum wage increase to help the lowest-paid workers. Opponents say businesses will just eliminate jobs.

In one of his weekly addresses earlier this year, President Obama asked that the public put pressure on Congress to “give America a raise.”

The President would like to see the federal minimum wage raised to $10.10 an hour, a nearly $3 an hour from the current $7.25,  that would take a full-time worker from making roughly $15,000 annually to over $20,000.

Tsedeye Gebreselassie, a staff attorney at the National Employment Law Project, says while that may not seem like a lot of money, it can make a big difference.  

“$20,000 a year is still not a princely sum, but it’s a significant increase for the roughly 28 million workers who will benefit,” Gebreselassie says.

And Gebreselassie argues that it isn’t just individual workers who benefit from the wage hike. The economy could benefit, too.

“When you put more money into the pockets of low-income workers, they’re going to go out there and spend it immediately because they have to on basic necessities like food [and] clothing. And that helps local businesses that rely on that business to stay afloat,” she says.

John Arensmeyer, founder and CEO of the Small Business Majority, supports the hike. He says that the increase in pay would directly benefit small businesses along with the rest of the economy.

“[Raising the minimum wage] would ensure that there’s more money in our economy so that people can buy small business products and services. It’s the old Henry Ford adage.  He wanted to pay his employees enough so that they could buy his cars,” Arensmeyer says.

In a poll conducted by the Small Business Majority, 57% of small business owners said that they supported an increase to the federal minimum wage to $10.10 an hour, with 82% reporting that they already pay more than the minimum wage.

Arensmeyer says that there is no real evidence that raising the minimum wage would decrease the number in jobs, but that studies do show that increasing the minimum wage would put billions of dollars into the economy and reduce the need for public assistance.

“In order to maintain a thriving middle-class based economy, you have to have money circulating through the economy and you have to pay people enough so that they can buy products and services,” Arensmeyer says.

Not all small business advocacy groups agree with Arensmeyer on the proposed minimum wage hike, including the National Federation of Independent Business. We reached out to the NFIB for comment, but as of now, they haven't responded. This page will be updated to reflect their response if they do so.

About the author

Candace Manriquez is a freelance producer for Marketplace.

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