Two sides to minimum wage debate, expert says
February 27, 2013 4:53PM
As is typically the case in national politics, the two main political parties are split on President Obama’s call for a higher minimum wage.
Democrats, including the president, argue that raising the minimum wage to $9 per hour from $7.25 per hour would boost the economy and help reduce the number of people living in poverty.
Republicans, including Speaker of the House John Boehner and 2012 vice presidential candidate Paul Ryan, argue that a higher minimum wage could hurt the economy by costing jobs for those at the bottom of the pay scale.
So, who’s right? According to Pittsburg State University economics professor Chuck Fischer, the answer is, both parties are.
“There’s not a simple answer to that,” Fischer, who specializes in labor economics, said. “When you’re talking about raising the minimum wage, it cuts both ways. Where you stand probably determines how you view the issue.”
While there are solid arguments on both sides of the debate, Fischer said the downsides likely outweigh the positives while the national economy remains fragile.
“Right now, with so much focus on small business and job creation, this probably isn’t the best time to raise the minimum wage,” he said.
Fischer said there is merit to the Republican argument that raising the minimum wage could hurt low-wage workers.
“You very well could see those workers lose their jobs because employers may not want to pay the higher wage,” Fischer said. “If jobs aren’t cut, those workers’ hours could be. So, while their hourly rate may be higher, they could still end up making less per pay period. The only workers it will definitely help are those who keep their job and don’t have their hours cut.”
Fischer said businesses “cringe” when the minimum wage increases because their labor costs increase.
“And in the end, someone has to pay for that,” he said. “That’s another potential downside to raising the minimum wage. It’s possible that companies will pass those added expenses on to the consumer.”
He also said that raising the minimum wage will not substantially reduce poverty in the United States.
“Most of the minimum wage earners are teens living at home,” he said. “Most of them don’t come from households living in poverty.”
Fischer there are valid arguments in favor of raising the minimum wage.
“The minimum wage has lost a lot of its purchasing power since it was implemented in the late 1930s,” he said. “It has not kept up with inflation, so raising it would help in that regard.
“It’s also a good thing to do politically,” he said. “It has a lot of political mileage because, at face value, it sounds like a good thing to do. Who doesn’t want to help people make more money?”
In today’s economy and political climate, however, Fischer thinks the nay votes will carry the day.
“I don’t think it will pass,” Fischer said. “It would be more successful if we had a more robust economy.”
©2013 Pittsburg State University