Advocates of a proposal to raise the minimum wage argue that it will lift millions of low-wage workers out of poverty, but opponents say the plan would have the opposite effect, killing jobs and making it more difficult for some to find work.
In his State of the Union address on Tuesday night, President Obama urged Congress to raise the minimum wage from the current federal level of $7.25 an hour to $9 an hour by 2015 and index it to inflation.
Economic Policy Institute said that 15 million workers would directly benefit from the increase in hourly wages, pushing up paychecks by $22 billion by 2015. However, several business leaders argue that a higher minimum wage would hamper the ability of young, unskilled and even low-skilled workers to establish themselves in the labor force while adding the burden of higher costs onto restaurants, stores and other smaller firms. Bill Dunkelberg, the National Federation of Independent Business chief economist, said the wage increase would make it harder for unskilled workers to get a job and that the raise in labor costs would be passed on to customers who would have less purchasing power. Dunkelberg cites the last minimum wage increase in 2009 as the reason why there were more than 800,000 teen jobs lost that year and why the jobless rate for that age group is stuck above 20 percent.
In contrast, an EPI study showed that increasing the federal minimum wage to $9.80 by July 1, 2014, would raise the wages of about 28 million workers, who would receive nearly $40 billion in additional wages over the phase-in period.
Congress last voted to raise the federal minimum wage in 2007, approving legislation that raised the minimum wage would rise from $5.15 per hour to the current rate of $7.25 by July 2009. 19 states have already established minimum wage rates higher than the current federal rate of $7.25.
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