Minimum wage increase could hurt workers it seeks to help
LA CROSSE, Wis. — — President Barack Obama has put the debate over increasing the minimum wage back on the table.
In the State of the Union address Tuesday, Obama called for the minimum wage to be increased to $9 by 2015, a suggestion that could force some local businesses to rework their payrolls.
Everyone would like to make a little more money, but it’s not as simple as just raising the minimum wage.
Economists worry it could come with some nasty side effects and in the end leave some workers worse off then they were before.
Obama’s call to raise the federal minimum wage is sparking some local concern.
“Studies have shown that increases in the minimum wage can lead to increased unemployment, specifically among young workers, the workers most likely to be earning the minimum wages,” said UW-La Crosse economics professor Adam Hoffer.18556120
But Rolan Covert, owner of 360Clean. said the president’s suggestion is not shocking.
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“At some point, the wages are going to increase,” said Covert.
It will cause a ripple effect in the business.
“What you have to look at is, as wages increase all your other costs are going to increase as well,” said Covert.
A main argument behind the increase is that people simply can’t live on $7.25 an hour anymore.
But Hoffer said the majority of minimum wage workers’ aren’t counting on the job to cover their cost of living.
“If 80 percent of the people earning the minimum wage were single parents with dependents and children and people to take care of I think this would be a much different issue, but the people we see earning the minimum wage are primarily teenagers or people that are dependents or have some other source of income,” said Hoffer.
Hoffer said while the increase looks to help minimum wage workers, those would actually be the ones hurt the most.
“It’s the people who don’t get a job that they could have earned at the lower minimum wage. So if the minimum wage was raised to $9 an hour, we would see some of the jobs that are paying $7.25 go away and so it’s those people that lose their jobs that pay the biggest price of the minimum wage,” said Hoffer.
If the federal wage is increased, it would supersede Wisconsin minimum wage and businesses would have to comply with the new federal standard.
In Obama’s proposal, after the minimum wage hit $9 in 2015, it would then be tied to inflation.