Do you remember President Obama saying he will try to raise the minimum wage to 10.10 dollars per hour (from 7.25 dollars/hour) a few weeks ago? Supporters of raising the federal minimum wage say it will increase productivity, lower turnover, and increase wages for 28 million workers. However, as we are aware, critics argue that higher minimum wage will hurt jobs and consumers. This is a sensitive issue that is extremely difficult for the congress to make decision on.
We have a new analysis from the nonpartisan Congressional Budget Office (CBO) pointing out that both sides have a point. While gradually raising the minimum wage to $10.10 would boost the incomes of low-wage workers and lift 900,000 out of poverty, it results in the loss of 500,000 jobs.
The point I am trying to make here is: Is 500,000 jobs a lot? On macro level, CBO says it represents only a 0.3% decrease in employment. It might hurt in short term, but we can consider it as an investment for the long term. Also, as prof. mentioned in a comment, there are people with more than two jobs to survive. Higher minimum wage can help them to increase productivity and give more leisure hours.
While the Congress is still in debate, Gap CEO Glenn Murphy announced that the retailer will start paying the U.S. workers at least $9 an hour in June of this year, and $10 an hour in 2015. He said, “Our decision to invest in front line employees will directly support our business, and is one that we expect to deliver a return many times over.” He also said this is not a political issue to us.
However, apparently, it is political issue to the Congress. CNN Money says, “Once the CBO report came out: Republicans who oppose the $10.10 proposal immediately seized on CBO’s job loss estimates, while Democrats touted the agency’s assessment that a higher minimum would lift 900,000 workers out of poverty.”