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 problem with the minimum wage, from the perspective of the low-wage worker, is that it helps only the people who maintain their jobs. “But likely, businesses will demand fewer workers at that wage,” Deck said.

Montine McNulty, the executive director of the Arkansas Hospitality Association, said she thinks jobs will dry up if the minimum wage is increased.

“By making entry-level employees more expensive for somebody to hire, we could just end up with a higher unemployment rate,” said McNulty, whose association represents the restaurant and lodging industries in Arkansas, major employers of low-wage workers.

A quarter of the workers across the country who were making the federal minimum wage in 2011 were in jobs tied to food preparation and service, according to the latest figures from the U.S. Bureau of Labor Statistics.

The debate over the pay in Arkansas comes at a time when President Barack Obama supports raising the federal minimum wage even more, to $10.10. A vote on the issue is expected in the U.S. Senate by early April, said Arun Ivatury, campaign strategist for the National Employment Law Project of Washington, D.C., which is lobbying for the higher federal minimum wage.

“Certainly from our organization’s perspective — and the bill’s champions on both sides of the Senate and the House, as well as the president, have all made very clear that they think $10.10 is a right number. It puts a family of three over the poverty line,” he said. “There’s no reason we should go below that.”

But if the minimum wage climbs to $10.10 in the second half of 2016 as proposed, the Congressional Budget Office’s projection lays out starkly the bad news and the good news:

• On one hand, total employment would likely be reduced by about 500,000 jobs. That's less than half of a percent of the 145.2 million people currently employed in the U.S., but several months' worth of job growth at the recent sluggish pace.

• On the other hand, 16.5 million hourly-wage workers would see their earning increase, and a $10.10 minimum would raise most of their family incomes above the federal poverty threshold.

The CBO report also tackled the question of the earned income tax credit.

"To achieve any given increase in the resources of lower-income families would require a greater shift of resources in the economy if done by increasing the minimum wage than if done by increasing the EITC," the report said.

And, the CBO noted, "an increase in EITC would go almost entirely to lower-income families."



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