ARBOR WEALTH: Minimum wage debate obscures larger jobs issue

Published: Thursday, March 20, 2014 at 05:41 PM.

“I got a job but it ain’t nearly enough …” — “Good Ol’ Boy” by Steve Earle

  Should the U.S. raise the minimum wage by $2.85 an hour to establish a baseline U.S. hourly wage of $10.10?

Apparently, two-thirds of Americans think minimum wage should be increased.  By how much is an overriding issue.

“Polls show that raising the minimum wage is broadly popular,” writes Zach Goldfarb in the Washington Post. 

Last week we highlighted the career of Ray Kroc, who utilized teenage workers and low wages to keep costs down and build a fast food empire. And to make his company’s stock a favorite for investors. Many start-up businesses survive by minimizing overhead. If the new wage law is enacted as proposed, many small enterprises may be forced out of business. Those that manage to stay afloat may cut back on hiring and even institute layoffs. Some small businesses which are voluntarily offering medical insurance to employees may be forced to forego providing that benefit to offset new costs.

The CBO report (non-partisan Congressional Budget Office) says that if the minimum wage rises to $10.10 that layoffs could be relatively minimal, or they could amount to a million jobs lost. Some greater degree of specificity would certainly be helpful here. Losing 30,000 jobs is one thing. But a million jobs lost is quite another.

On the flip side, the CBO says that such a move “would increase earnings for 16.5 million low-wage Americans,” according to Goldfarb. The report also predicts that such a move could lift some 900,000 Americans out of poverty. 

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