The battle over whether or not to raise the nation's minimum wage continues to wage on across the country and of course, throughout the news media. Sticking to their normal party line of defending the far right conservative position, the talking heads on Fox News are against any increase in the minimum wage.
During President Obama's recent State of the Union address, the president agreed with over 600 economist who note that raising the federal minimum wage would help give the economy the much needed boost that it needs. The current federal minimum wage is set a $7.25/hr and President Obama has promoted the idea of an gradual increase that would hit $10.10/hr by 2016 and would be indexed to inflation moving forward. During a recent episode of "Fox and Friends" on the Fox News channel, host Brian Kilmeade warned that raising the minimum wage would halt hiring and cause a "ripple effect" that would be negative for the economy.
"And how is this going to affect business? Just think about this real quick, if you want to get - elevate everybody's minimum wage to $10.10 from $7 and something else, you have to say to yourself, those people who are making $2 above minimum wage, whatever it was, they're going to go "excuse me, could I have a raise? Because the whole country have a raise?" And then you got to ask every business owner, "can you handle that? Will it affect hiring?" So there's going to be a ripple effect. But the president's trying to show that he's not going to be hamstrung by a legislature that does not get along."
Raising the minimum wage is a highly debated topic, but as the Washington Post points out, raising the federal floor to the proposed $10.10/hr would lift nearly 5 million Americans out of poverty.
"Raising the minimum wage to $10.10 an hour, as many Democrats are proposing in 2014, would reduce the number of people living in poverty by 4.6 million. It would also boost the incomes of those at the 10th percentile by $1,700. That’s a significant increase in the quality of life for our worst off that doesn't require the government to tax and spend a single additional dollar."
The most basic thought process of an minimum wage increase is pretty simple. If those who are more inclined to spend have more money, the private sector will see their profits and demand increase leading to an increase in hiring. David Cooper of the Economic Policy Institute points this out.
"In a period of depressed consumer demand, raising the minimum wage can provide a modest boost to overall economic activity because it shifts income to workers who are very likely to spend it immediately.”
Not all economists are on the same page, however, as Jonathan Meer and Jeremy West of Texas A&M University notes.
“A minimum wage has two opposing effects on employment: it reduces demand for new workers by raising the marginal cost of an employee, while inducing additional search effort from unemployed workers"
Depending on what side of the aisle you stand on what economic ideology you prescribe to, more money in the hand of likely consumers is a good thing, as long as it doesn't get out of hand.