President Barack Obama has proposed increasing the federal minimum wage, raising it from $7.25 to $9 an hour. He also wants to tie future increases to inflation, so it adjusts automatically with the cost of living.
The proposal would gradually increase federally required hourly wages to reach $9 by the end of 2015, and would increase earnings of an estimated 15 million low-income workers. The Obama administration seeks to raise the minimum wage to address the growing income inequality in the United States, a challenge he has also targeted by increasing taxes on the wealthy. In his State of the Union address last week, Obama advocated for the policy:
Even with the tax relief we've put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That's wrong … Let's declare that in the wealthiest nation on earth, no one who works full time should have to live in poverty.
Raising the required hourly rate to $9 would bring it higher than it's been in 30 years, but (adjusted for inflation) would still be lower than the federal minimum wage in the 1960s and 1970s. States are free to set their own minimum wage level, and several already set it above the federally required $7.25. Washington is the only state with a wage already above $9 per hour. A Rasmussen Reports survey found 54 percent of likely voters supported a minimum wage hike.
Business groups often oppose minimum wage increases because they say it increases operating costs, and can lead to layoffs. It can also lead to a reduction in hiring, because each employee is now more expensive. Opponents point to studies concluding that raising the minimum wage doesn't actually reduce poverty, because many low-income workers already make more than the minimum wage. They also say minimum wage workers could get priced out of the job market if their labor becomes too expensive for employers.
Republican House Speaker John Boehner opposes increasing the federal minimum wage, and said the hike would only end up hurting the people it aims to help:
I've been dealing with the minimum wage issue for the last 28 years that I've been in elected office … When you raise the price of employment, guess what happens? You get less of it. At a time when Americans are still asking the question, 'where are the jobs?' why would we want to make it harder for small employers to hire people?
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