About Barack Obama´s Plan to Raise the Minimum Wage in the USA – 6

Paul Krugman published on December 1, 2013 an article titled “Better Pay Now” in the The New York Times.

In this article Krugman gives some good arguments for raising the minimum wage in the United States: “Although the national minimum wage was raised a few years ago, it’s still very low by historical standards, having consistently lagged behind both inflation and average wage levels. Who gets paid this low minimum? By and large, it’s the man or woman behind the cash register: almost 60 per cent of U.S. minimum-wage workers are in either food service or sales. This means, by the way, that one argument often invoked against any attempt to raise wages — the threat of foreign competition — won’t wash here: Americans won’t drive to China to pick up their burgers and fries.

Still, even if international competition isn’t an issue, can we really help workers simply by legislating a higher wage? Doesn’t that violate the law of supply and demand? Won’t the market gods smite us with their invisible hand? The answer is that we have a lot of evidence on what happens when you raise the minimum wage. And the evidence is overwhelmingly positive: hiking the minimum wage has little or no adverse effect on employment, while significantly increasing workers’ earnings. (…).

When it comes to the minimum wage, however, we have a number of cases in which a state raised its own minimum wage while a neighbouring state did not. If there were anything to the notion that minimum wage increases have big negative effects on employment, that result should show up in state-to-state comparisons. It doesn’t.   

So a minimum-wage increase would help low-paid workers, with few adverse side effects. And we’re talking about a lot of people. Early this year the Economic Policy Institute estimated that an increase in the national minimum wage to $10.10 from its current $7.25 would benefit 30 million workers. Most would benefit directly, because they are currently earning less than $10.10 an hour, but others would benefit indirectly, because their pay is in effect pegged to the minimum — for example, fast-food store managers who are paid slightly (but only slightly) more than the workers they manage”.

And as one can observe in the chart offered by the Wikipedia article “Minimum wage in the United States” there are in fact marked variations between the minimum wages of the different 50 US States. In some US States the minimum wages are considerably higher than in other US States.

See for this also the chart given on the webpage titled “State Minimum Wages” of the website of the “National Conference of State Legislature” (a bipartisan NGO).

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