Obama Advocates Federal Minimum Wage Increase after Local Action

Meanwhile, a National Bureau of Economic Research study finds that minimum wage hikes tend to shrink the pool of low-skill jobs.

By Published on June 23, 2015

With Rhode Island being the latest state Monday to raise it minimum wage, President Barack Obama is once again calling for a national wage increase.

“I commend the Rhode Island Legislature and Governor Raimondo for once again taking action to raise their state’s minimum wage,” the president said in a statement.

The minimum wage increase was signed into law by Gov. Gina Raimondo, a Democrat, and will raise the current wage of $9 an hour to $9.60 an hour by next year. Though lawmakers originally wanted it to be higher, some business groups warned they wouldn’t be able to afford it, according to The Associated Press.

Nevertheless, Rhode Island is just the latest in a series of state and city wage increases across the country the president sees as a sign the federal government should heed his earlier push and pass a national law to raise the minimum wage.

“Since I first called on Congress to increase the federal minimum wage in 2013, 17 states have acted on their own, which will grow the paychecks of millions of American workers,” he continued. “Many private companies have acted as well, recognizing that paying workers fairly is both good for business and the right thing to do.”

“This year, more than half of our states guarantee their workers a wage higher than the federal minimum, but despite this progress we still have work to do,” the president concluded. “I continue to encourage states, cities, counties and companies to lift their workers’ wages, and I urge Congress to finally do the right thing and give America a raise.”

Though supporters argue the end result of an increased minimum wage is more consumer power and less people in poverty, opponents warns there will be adverse consequences.

According to a study by the National Bureau of Economic Research (NBER), employment for low skilled workers falls as the minimum wage goes up. The study titled, “The Minimum Wage and the Great Recession” found that the 40 percent federal minimum wage increases between 2007 and 2009 reduced employment and income growth for low skilled and younger workers.

The Heritage Foundation has found similar results. A report from the Center for Economic and Policy Research (CEPR), however, found that an increase of the minimum wage does not have much impact on employment.

“Two recent meta-studies analyzing the research conducted since the early 1990s concludes that the minimum wage has little or no discernible effect on the employment prospects of low-wage workers,” the report found. “The most likely reason for this outcome is that the cost shock of the minimum wage is small relative to most firms’ overall costs and only modest relative to the wages paid to low-wage workers.”

The Illinois Policy Institute (IPI), on the other hand, found raising the minimum wage may not be as necessary as supporters say.

“Of those workers making the minimum wage today, two-thirds will be earning a higher wage one year from now,” an IPI report by Naomi Lopez Bauman stated. “Most workers, once they learn the job and demonstrate a level of competence, will earn more as the value of their labor increases to their current employer or a competing one.”

Seattle and San Francisco, which led the way in passing a $15 minimum wage, have already seen some businesses close because of the increased cost of labor. Nonprofits in Los Angeles, the most recent city to pass a $15 minimum wage, also have reported problems as well.

Nevertheless, Americans for the most part overwhelmingly support raising the minimum wage. According to Gallup, upwards of 76% of people favor raising it to $9 an hour while 22% opposed the idea. Studies on the subject have shown varying results.


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Copyright 2015 The Daily Caller News Foundation

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