Monday February 18, 2013

The Kennebec Journal of Augusta (Maine), Feb. 14, 2013

President Barack Obama surprised the experts with a new plan to spur economic growth and close the widening income gap: increase the minimum wage.

It is the right policy direction for the nation and one that Congress should follow.

A full-time minimum wage earner now brings home $14,500 per year, Obama said. That’s below the federal poverty line if the worker is supporting two children.

Obama made this a moral challenge in his speech, saying "Tonight, let’s declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty."

He proposed increasing the federal minimum wage to $9 per hour, from the current $7.15.

The increase not only would be a moral choice, but also a good economic one.

During the last few years, only the top wage earners have seen real growth in income. Those at the middle and bottom have been stuck, exacerbating income inequality, which is not only bad for American democracy but also keeps the economy from growing.

Congress and the president took a step toward addressing this inequality in the fiscal cliff deal, which raised taxes on the highest earners while preserving tax cuts for low-wage earners and the middle class.

Raising the minimum wage puts money into the pockets of people who will spend it. Circulating that money through the economy will do more good than giving it to people at the top of the economy.


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They already consume as much as they can and likely would save additional income.

Critics charge that raising minimum wages leads to higher unemployment. As proof they point to the 2006-07 increases that preceded high unemployment in 2009 and beyond.

If raising the minimum wage was all that took place in those years, they might have a point. Ignoring the financial collapse brought on by a speculative bubble in mortgage-backed securities, however, makes it hardly worth addressing.

Low-wage workers were the victims of the collapse of the job market, not the cause of it.

Since the last time the federal minimum wage was increased, 19 states have raised their minimum wages. Maine, which has a minimum wage of $7.50 per hour, could not afford to pass an increase as high as Obama is proposing and would risk putting itself at a competitive disadvantage.

Maine and other low-wage states need the federal government to pass the same wage increase for everyone, so all states can benefit.