The debate over the federal minimum wage

February 25, 2014

The Minimum Wage Debate

There has been a lot of talk lately about raising the minimum wage at the federal level.  President Obama’s recent Executive Order raising the minimum wage for those employed with federal contractors to $10.00 is a symbolic move that affects about 400,000 workers.  History tells us that Executive Orders can have impact over time as did Executive Order 11246, signed by President Lyndon Johnson on September 24, 1965, requiring federal contractors to have Affirmative Action programs in place.

At the same time, the data regarding the financial impact of raising the minimum wage to $10.00 per hour appears mixed.  The Office of Management and Budget projects that about 900,000 wage earners would be elevated from below the poverty level with such an increase.  But, they also project job losses of about 400,000 as employers hesitate to add new staff or reduce the number of employees already in place.

The human side of the story is the more compelling one, however.  It is a disincentive to work a 40 hour week and still live below the poverty line.  From a human dignity point of view, it just does not make sense.  The combination of an increase of the minimum wage along with some modifications to the earned income tax credit would help wage earners teetering on the poverty line to participate more fully in the economy, both as contributors to it and beneficiaries of it.

My sense is that there is more momentum for increases of the minimum wage at the state level.  California is leading the charge.  But without some additional help at the federal level, the plight of the currently marginalized minimum wage worker is still very much in jeopardy.

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