Newspaper article St Louis Post-Dispatch (MO)

Some Pros and Cons of Raising the Minimum Wage

Newspaper article St Louis Post-Dispatch (MO)

Some Pros and Cons of Raising the Minimum Wage

Article excerpt

Depending on whom you talk to, President Bill Clinton's plan to raise the minimum wage by 90 cents an hour would help the working poor, cost thousands of them their jobs, drive some small employers out of business, or energize the economy.

"If we are serious about getting people out of welfare and to work, it's necessary to provide a livable wage," Labor Secretary Robert Reich said recently. Minimum-wage earners bring home only $8,500 a year, "and that's simply not a livable wage."

An increase to $5.15 per hour from $4.25 would transfer $9.2 billion a year into workers' pockets and so "help keep the economy robust," Reich said.

Last raised in 1990, the minimum wage has not kept up with inflation. Its value is 26 percent less today than it was in the 1970s.

Critics of a boost - such as economist Mark Wilson of the conservative thinktank, the Heritage Foundation - claim it will prevent employers from creating as many as 677,000 entry-level jobs over the next five years.

It's "not a sensible way of trying to increase real wages," Wilson said.

"The minimum-wage (increase) always causes job loss and throws out of the job market essentially those people it is trying to help, those with the least skills who are having the hardest time finding jobs," agreed Jeffrey Joseph, domestic policy spokesman for the U.S. Chamber of Commerce in Washington.

Some small businesses could actually go under if, in response to a mandated wage hike, they don't lay off workers or raise prices, said Kristin Hogarth, spokeswoman for the National Federation of Independent Business.

"Employment is going to fall if you increase to $5.15," warned Texas A&M economist Donald Deere. "Just by passing a law there's no increase in productivity, no increase in goods and services."

He termed it "fundamental economics" that if you raise the price of something less of it will be bought, including labor. …

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