A Federal Minimum Wage and the States

By Logan Albright and Ike Brannon

The White House has been spending an inordinate amount of time and energy this year advocating that Congress increase the federal minimum wage from the current $7.25 an hour to $10.10. No doubt, some Democratic Party supporters of the proposal believe it would help low-income workers; however, their Republican rivals aver, , the effort is also intended to contrast the two parties to the electorate and help the Democrats maintain control of the senate in this November’s election.

The chief objection republicans have to a minimum wage increase is that the jobs lost from an increase outweigh the benefits of paying higher wages to low-wage earners who keep their jobs, and that a majority of those earning the wage are students who are not using their income to support a family. Democrats respond that the job losses from a wage increase would be minimal and argue that higher wages would provide a demand-side stimulus to the long-struggling economy. They also often claim that an increase would boost productivity via an efficiency-wage effect, and suggest that—precepts of economics be damned—companies employing low-income workers are simply insensitive to moderate wage increases.

This article originally appeared in Regulation. Click here to read the full article.