Questioning a minimum wage increase

Marketplace Staff Jul 24, 2008
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Questioning a minimum wage increase

Marketplace Staff Jul 24, 2008
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Bob Moon: California Governor Schwarzenegger is threatening to cut the pay of thousands of state workers back to the federal minimum wage. Lawmakers have failed to reach a compromise on the state’s overdue budget. Using the federal minimum wage would be an especially deep cut for 200,000 state employees, since the federal pay floor is $1.45 less than California’s minimum wage.

And that brings us the pay raise that many workers across the country will be getting today. The federal minimum wage is going up 70 cents, which adds up to an extra $1,400 a year for a lot of workers. As Marketplace’s Renita Jablonski reports, it adds another layer to the minimum wage debate.


Renita Jablonski: The new federal minimum wage is $6.55 an hour — still below the minimum wage in about two dozen states.

Darren Lubotsky is an economics professor at the University of Illinois at Urbana-Champaign. He says extra cash will be welcome given higher food and gas prices, but in this slow economy, the questions around minimum wage are louder than ever.

Darren Lubotsky: The big controversy over the minimum wage is first, is it an effective anti-poverty tool, and second, does it adversely affect employment or profit?

Rick Berman at the Employment Policies Institute says certain groups could have more difficulty getting jobs as businesses cut back to afford the wage increase.

Rick Berman: Teenagers, minority youth, as well as unskilled adults are usually the ones who have a more difficult time being employed or staying employed.

Next year, the federal minimum wage will go up to $7.25 an hour.

I’m Renita Jablonski for Marketplace.

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