In President Obama’s most recent State of the Union Address, he called for an increase of the federal minimum wage from $7.25 to $9 per hour. However, now, according The Huffington Post, “President Barack Obama is throwing his support behind congressional Democrats’ proposal to raise them minimum wage to $10.10 and peg it to inflation….”
After deep cuts to federal welfare programs, many Democrats believe that raising the minimum wage is a better way to address that issue than restoring benefits. Also, included in the plan is an effort to raise the minimum wage for tipped workers, which can be as low as $2.13 per hour.
Critics of the move, suggest that raising the minimum wage would put undue strain on businesses that have suffered as the economy struggles towards recovery. Some, such as James Sherk writing for The National Review, compares raising the minimum wage to an attempt in American Samoa in 2007 in which “unemployment septupled from 5 percent to 36 percent.” Shrek also says, “businesses will not pay workers more than the value they create – at least not if they want to remain in business.” Instead, the thinking is to leave it alone and let the free market solve the problem.
However, Sherk’s analogy isn’t the strongest, considering American Samoa’s GDP is about 140 times smaller than the GDP of Rhode Island. Also, decrying an increase in minimum wage and the current state of federal income assistance is seen as trying to have someone else’s cake and eat it too. Since a significant percentage of those who receive state and federal assistance are in fact employed, it can be argued that it amounts to an indirect subsidizing of their workforce. Proponents of an increased wage say that no one should work full time only to still live in poverty.