Minimum Wage to $10.10- Dan Hickey

President Obama has recently gone on the record of saying that he would like to raise the federal minimum wage from its current position of $7.25 to $10.10.  A policy decision of this sort has obvious economic conditions- both positive and negative.  For starters, the clearest benefit is the increased disposable income that comes to those who receive the raise.  Their incomes would instantly increase by almost 50%, potentially sending ripples throughout the economy.  The wage increase may have an economic multiplier effect.  Furthermore, this may move many workers from below the poverty line and reduce the cost of social welfare programs. 

On the other hand, this action would certainly cause an immediate increase in the unemployment rate.  Companies would have to compensate for the increased wage by laying-off other employees, causing more people to fall into unemployment.  The cost of helping some by a little is hurting others by a lot.  Students and those who need the job most would be let go first- it would put many marginal families completely out of work.  Additionally, many governments are ill equipped to pay this sort of rate.  Illinois, for example, is broke and unable to pay government employees over $10 an hour.  Potential presidential candidate Marco Rubio said it well when he said that he would love to see the minimum wage raised to $30, but a law is not the best way to do it.  The best manner to achieve this is through a strong, growing economy.

Sources:

http://www.bloomberg.com/politics/articles/2015-01-26/the-republican-approach-to-the-minimum-wage

http://wheniwork.com/blog/the-pros-and-cons-of-raising-the-minimum-wage/