President Barack Obama wants to raise the federal minimum wage from $7.25 to $9 to increase income of the impoverished.
During his State of the Union address Obama said currently a mother with two kids who works full time for minimum wage lives below the poverty line.
“In the wealthiest nation on earth, no one who works full time should have to live in poverty,” Obama said.
A new federal minimum wage, the first since July 24, 2009, would come as a relief to students like Brittany Beasley, a junior English major.
“I feel that an increase in minimum wage is a good thing because it is beneficial to the citizens, especially the residents of Louisiana since we have continuous tax raises and other costs that continue to rise,” said Beasley.
While most Americans want to see Obama help the poor, some feel raising minimum wage is the wrong way to go.
Andrew Parker, a junior political science major said, “Anyone who knows much about business is aware that’s not the way to boost the economy. If anything, that would be harmful to the economy.”
ULM Finance professor Paul Nelson says, “Whenever the price of something rises, other things equal, the quantity purchased will fall.”
He believes raising minimum wage could increase unemployment.
“If raising the minimum wage was a costless way to give workers a little more income then why stop at $9 an hour? Why not $10? $25? $100? $500? We can all be rich just by passing a law. Unfortunately, the world does not work that way.”
This is the type of debate that has occurred about minimum wage since a federal minimum was first introduced in 1938 at $0.25 per hour. That’s nearly 4 dollars per hour adjusted for inflation.
A minimum wage was established to combat declining wages during the 1930s, which was the decade of the Great Depression.
The highest federal minimum wage, adjusted for inflation, was in 1968. It was $1.60, the equivalent of $10.51 in today’s money.
However, there are consequences to an increased federal minimum, said Tammy Parker, a ULM Finance professor.
“As wages are forced up, prices charged consumers will be forced up. An increase in overall prices is called inflation,” Parker said. “So, the worker may be making $9 an hour, but they will be paying higher prices for the items they purchase.”
Parker also said the increased wages could prevent the students it was aimed to help from being employed. Adults like “‘soccer moms’ looking to boost their family income” or who lack training or a higher education will find those minimum wage jobs appealing.
“Oftentimes, the ‘soccer moms’ or other adults with responsibilities such as family may be perceived as more reliable and get the min wage job that was really intended for a transitional student,” Parker said.
