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The current federal rate took effect in 2009. Nineteen states and the District of Columbia have higher minimum wage rates than the federal requirement. Washington state's is highest at $9.19. New York's rose to $7.25 at the start of 2012, but there are talks underway that could raise that to $8.75 shortly.
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Glenn Wiggle, WBEN Money Host
The Financial Guys |
Mike Durant, NYS Director, National Federation of Independent Business
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| Do you think the federal minimum wage should be increased? |
| Yes |
 ( 28% )
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| No |
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( 72% )
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The federal proposal in Pres. Obama's State of the Union address Tuesday, is sure to draw opposition from business groups and congressional Republicans who say higher rates increase costs and reduce employment.
The White House says the new wage would raise pay for more than 15 million workers and indirectly help millions more. The president wants the rate to increase in stages over three years.
after Gov. Andrew Cuomo gave the long-blocked effort a big boost in his proposed budget.Cuomo proposed to increase the minimum wage from $7.25 an hour to $8.75. The proposal would set specific minimum wage levels to be enacted in coming years. That could begin with the $8.75 minimum wage that Cuomo proposes for July 1 or with Assembly Speaker Sheldon Silver's proposal of $8.50 an hour this year and building to Cuomo's level. It could be linked with business tax breaks that Senate Republicans have long sought. Regular increases would no longer make the minimum wage a perennial political football, said Bill Lipton of the progressive Working Families Party. Business groups including the state Business Council and Unshackle Upstate still oppose a minimum wage increase as New York continues its economic recovery. They said an increase could force employers to cut jobs. But Unshackle Upstate is open to discussion, and a possible "training wage" for new workers. "Without measures in place to offset the added costs, this hike will be detrimental to our business climate and taxpayers' wallets," said the group's Brian Sampson. |
If anything illustrated President Barack Obama's new sense of self-confidence, it was his State of the Union call for an increase in the national minimum wage.
For much of the past two years, the president and his aides have worked to shed an image that he was anti-business, to bury his once-upon-a-time dismissal of bankers as "fat cats," to invite corporate and entrepreneurial voices into the White House.
The result was that one of the cogs of the Democratic Party, the organized labor movement, felt left adrift by the president. No more.
 President Barack Obama followed up his call for the increase from $7.25 to $9 an hour in Tuesday night's State of the Union address with a trip to a North Carolina manufacturing plant Wednesday. The president is pushing for a higher minimum wage because he says Americans who work full time should not be in poverty. Canadian-based Linamar Corp. opened a former Volvo plant in Asheville that had gone dark and rehired some of its workers. Obama touted it as an example of America attracting jobs from overseas. He says the key to reviving America's economy is to bring more jobs to the United States, give Americans the skills they need to perform them and provide those workers with a decent living. Linamar produces heavy-duty engine and driveline components. In 2011, the company announced that its fourth U.S. manufacturing facility would be at the site of a shuttered Volvo Construction Equipment plant in Asheville. The company has hired 160 workers and will hire 40 more by the end of the year, the White House said. In his speech before a joint session of Congress Tuesday night, Obama called job creation his "North Star." He asked Congress to focus on attracting jobs to the U.S., training American workers and boosting investments in infrastructure, manufacturing and clean energy. Obama also says he wants to raise the minimum hourly wage from the current $7.25 to $9 by the end of 2015. In his bid to boost manufacturing, Obama is launching three "manufacturing innovation institutes" - partnerships among the private sector, the federal government and colleges "to develop and build manufacturing technologies and capabilities that will help U.S.-based manufacturers and workers create good jobs," according to a White House fact sheet. He is asking Congress to create 15 more institutes. The proposal is a central element of Obama's plan to spur manufacturing, which has been a bright spot in the U.S. economy. Manufacturing expanded at a much faster pace in January compared with December. The White House outlined other steps the administration says it will take to continue improvements in manufacturing, which it says added 500,000 jobs the last three years after shedding jobs for more than 10 years. Among the steps: -Reforming the business tax code to end tax breaks to ship jobs overseas. -Expanding a program to help governors and mayors bring in business investment from around the world. -Strengthening enforcement of trade laws and taking new steps to open markets in Europe and Asia. |
In a move that cheered union leaders and rankled the business community, the president proposed raising the hourly minimum wage from $7.25 to $9 by the end of 2015 and linking future increases to inflation. The current rate has been in place since 2009.
"Working folks shouldn't have to wait year after year for the minimum wage to go up while CEO pay has never been higher," Obama said Tuesday as Democrats rose from their seats while most Republicans sat stone-faced.
Whether Obama can win in a divided Congress, where Republicans control the House and Democrats the Senate, remains to be seen. But the president's calculation is clear: If there was a time to deliver on a 2008 campaign promise it is now. And if there was an issue where labor would have his back, this would be it.
"Working people have had their workloads dramatically increased during the economic crisis, while their pay has fallen," Damon Silvers, the director of policy and special counsel at the AFL-CIO, said Tuesday night. "The president spoke tonight about raising wages as a goal of our nation's economic policy - and the labor movement will mobilize behind that goal."
To be sure, the president's proposal is more modest than it was in 2008, when he called for a $9.50 minimum hourly wage by 2011.
And while he cast the issue as one of economic fairness, he also made the economic argument that higher wages would mean more customers for businesses. He reminded his audience that even his 2012 rival Mitt Romney had at one point supported automatic cost-of-living increases to the minimum wage, though Romney later modified his stance.
The issue of economic inequality - its severity a matter of debate between liberals and conservatives - has long preoccupied Obama. In his first term, however, the recession required his immediate attention. And while his health care law was one attempt at addressing those disparities, the Republican gains of the 2010 midterm elections chastened him and his focus shifted to a debate with Congress over fiscal restraint.
But his economic aides continued to cite growing wage gaps between rich and poor as a vexing issue. A 2011 study by the Congressional Budget Office found that from 1979 to 2007, the wealthiest 1 percent of the population saw their after-tax income grow by 275 percent. For the same period, the 60 percent of the population considered middle-income saw their after-tax income grow just shy of 40 percent.
"We gather here knowing that there are millions of Americans whose hard work and dedication have not yet been rewarded," Obama said Tuesday.
"Our economy is adding jobs - but too many people still can't find full-time employment. Corporate profits have rocketed to all-time highs - but for more than a decade, wages and incomes have barely budged."
The issue has the kind of populist appeal that Obama can take directly to the public. White House aides believe that after Obama's solid re-election, Republicans are on their heels and are vulnerable to public pressure. If Republicans stand fast against an increase in the minimum wage, Democrats will be sure to use it against them during next year's midterm election campaigns.
Obama's attempts to cultivate business leaders and corporate executives could help forge a compromise. Past increases in the minimum wage have come with tax sweeteners and other benefits for the private sector, particularly small businesses. A wage hike could also become part of negotiations over corporate tax rates, which Obama is willing to overhaul if they increase revenue. Republicans could fight back, saying they might settle for one or the other, but not both.
For now, Republicans aren't ceding on either.
"Republicans are going to close the loopholes but we're going to do it to lower tax rates for all Americans," Said Rep. Kevin Brady, R-Texas, a senior member of the tax-writing House Ways and Means Committee.
He added: "Our goal shouldn't be to raise the minimum wage. It should be to get people off it."
Daniel S. Hamermesh, an economics professor at the University of Texas at Austin, agrees - to a point. He said that if the increases were linked to average wage hikes instead of the cost of living, that could even make an initial increase to $9 an hour worthwhile.
"Raising the minimum wage will kill off a few jobs and is a slightly harmful idea. Not a disaster, and some people will benefit. But it is a job-killing bill. There are better things to do," he said. "On the other hand, the proposal to tie the minimum wage to the cost of living is nearly excellent.'
-- Prof Daniel Hamermesh University of Texas at Austin
