Will a higher minimum wage help the economy?
A task force appointed by Chicago Mayor Rahm Emanuel recommended that the city raise the minimum wage to $13 by 2018, according to a July 8 report in The Chicago Tribune.
This is good news for single young workers plunging into a first job. But for families -- not so much. To have a secure living standard, a family of one adult and one child needs $4,431 a month in Chicago, according to the Family Budget Calculator on the Economic Policy Institute's website. That's about $1,100 per week or $27.50 an hour.
Lawmakers in 21 states and the District of Columbia have set a minimum wage above the federal level of $7.25. Independently, retailers Ikea and Gap have raised employees' wages. But workers – especially those with children – are still gasping for air. Notably, the group Fight for 15 in Chicago advocates a minimum wage of $15 per hour. President Barack Obama has called for raising the wage to $10.10.
The economic effect of a higher minimum wage is a matter of debate.
Some economists predict that employers will cut jobs and the higher wage will backfire. But higher incomes could also mean more spending – and an economic boom. Economic analysts have examined the impact of raising the minimum wage.
A Congressional Budget Office report looked the impact of two options: raising the minimum wage to $9 per hour or $10.10 per hour. Another report by David Cooper of the Economic Policy Institute focused on $10.10 per hour.
Here are some of the questions they addressed:
- Will raising the minimum wage reduce jobs overall?
- Is this about raising the salary of burger-flipping teens?
- Would raising the minimum wage to $10.10 move families out of poverty?
Among those who would benefit from raising the minimum wage to $10.10, roughly 26.5 percent are parents, according to the Economic Policy Institute.
- Would families living in poverty benefit most from raising the minimum wage?
Not everyone who will benefit from an increase in the minimum wage is considered low income. “The increased earnings for low-wage workers resulting from the higher minimum wage would total $31 billion,” according to the CBO. But the downside: “Just 19 percent of the $31 billion would accrue to families with earnings below the poverty threshold, whereas 29 percent would accrue to families earning more than three times the poverty threshold."
- So would an increased minimum wage help middle income families?
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