Today, Fox News ran a segment on today’s minimum wage increase — which raises the minimum wage from $6.55 to $7.25 an hour — accompanied by a chyron stating “How The Hike Will Hurt.”
While not as egregious as Fox News, most media outlets today are presenting the minimum wage hike in a he said/she said manner, with workers happy to see an increase pitted against claims that the increase will result in lost jobs and higher unemployment.
For instance, USA Today wrote that “many already-struggling businesses face the burden of increased payroll costs,” while the Washington Post aired the grievances of the National Small Business Organization, which said that businesses will “have to make the difficult choice of going under or laying people off.”
But as Dean Baker pointed out, “there is little reason to believe that [the increase] will result in substantial job loss”:
The impact of a rise in the minimum wage on employment is one of the most heavily researched topics in economics. Virtually all of this research shows that it will have little or no impact on employment. It would have been useful if the news reports had mentioned this research instead of treating this topic as a he said/she said, implying that those who claim that it will lead to large rises in unemployment are on an equal footing with those who emphasize the benefits to low wage earners.
Indeed, those claiming that the increase will cost jobs are looking at the situation only from the supply side — higher costs to business inevitably means job loss. However, the minimum wage increase is going to provide vitally needed stimulus in a weak economy, putting money directly into the pockets of low-wage workers most apt to spend it, causing increased demand, which is good for business.
The wage increase will amount to $28 per week for a full time minimum wage worker, and will affect about 2.8 million workers. Due to the increase, there will be “a $5.5 billion increase in spending at home — money that will increase business income and create new jobs.”
It would actually take a minimum wage of $9.92 to match the buying power of the minimum wage in 1968. As McClatchy’s Holly Sklar pointed out, “in today’s dollars, the 1968 hourly minimum wage adds up to $20,634 a year working full time. The new federal minimum wage of $7.25 comes to just $15,080. That’s $5,554 in lost wages.” And the first federal minimum wage was actually enacted in 1938, when one in five workers was unemployed (compared to today’s 9.5 percent unemployment rate).
Many business owners from across the country actually support the increase. As Richard Ketring, president of VHS Cleaning Services in Ashland, WI said, “when we raise the incomes of the lowest paid employees the money is immediately spent and flows instantly into the economy…I support the minimum wage increase not only because it is the right thing to do, but it is good for business.”