Minimum Wage Proposals Spark Disagreement

by Mark Friedman  on Monday, Mar. 10, 2014 12:00 am  

The Rev. Steve Copley, chair of Give Arkansas a Raise Now, said increasing the state’s minimum wage to $8.50 an hour will help more than 168,000 Arkansas workers.  Montine McNulty, executive director of the Arkansas Hospitality Association, said that if the minimum wage rises, restaurant owners would have two choices: lay off workers or raise the menu prices. (Photo of Copley by Jason Burt)

The Rev. Steve Copley said eight years is too long for Arkansas’ low-wage workers to go without a raise.

Copley of Little Rock is leading a coalition to get a ballot initiative in front of voters in November to gradually increase Arkansas’ minimum hourly wage from $6.25 — $1 below the federal minimum — to $8.50 by 2017.

“The problem we face now is that 160,000 people are working hard,” said Copley, who is chair of Give Arkansas a Raise Now. “They’re playing by the rules. They just can’t make ends meet.”

But whether raising the minimum wage — a burning issue in the tourism and hospitality industries — will actually help all the people it’s aimed at is a question of deep disagreement, even among experts.

There does appear to be, however, consensus on the minimum conditions necessary to have a sustainable economy.

Michael Strain, an economist at the American Enterprise Institute of Washington, D.C., said the goal should be that anyone who works full time and heads a household should make enough money to escape poverty.

Kathy Deck, director of the Center for Business & Economic Research at the University of Arkansas, agreed.

“We would all like to see people who work hard and work full time have enough money to live,” she said. “That seems like a reasonable goal. The challenge is to have an economy that allows that to happen.”

But whether directly increasing wages is the best path is not at all clear. Deck and Strain both said a better way to help the poor is to raise the federal earned income tax credit, a variation on the idea of a “negative income tax” that has traditionally been championed as a conservative alternative to raising the minimum wage.

“That’s a little more effective and a little less distortionary to business,” Deck said.

The earned income tax credit provides cash through the federal income tax system to low- and moderate-income families based on their earnings. The maximum credit in 2014 was $5,460, according to a February Congressional Budget Office report.

Raising the Minimum Wage

 

 

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