February 13, 2013

Proposed Minimum Wage Increase Is Flawed

Keith Hall

Senior Research Fellow
Summary

President Obama in his State of the Union Address last night proposed raising the federal minimum wage from $7.25 to $9.00 an hour to raise the incomes of millions of working families. Mercatus Center senior research fellow Keith Hall – former Commissioner at the Bureau of Labor Statistics – says there are two critical flaws with the president’s minimum wage plan.

President Obama in his State of the Union Address last night proposed raising the federal minimum wage from $7.25 to $9.00 an hour to raise the incomes of millions of working families.

Mercatus Center senior research fellow Keith Hall – former Commissioner at the Bureau of Labor Statistics – says there are two critical flaws with the president’s minimum wage plan: 

1.       There are not millions of working families making the minimum wage. In fact, about 1.7 million people currently earn the federal minimum wage – this is 0.7 percent of the working-aged population. Over half of these people are under the age of 25 and nearly a third are teenagers.

2.       Raising the minimum wage may reduce low-skilled employment, employer job training, and worker benefits. That would have a particularly negative impact during this historically slow economic recovery, not to mention the fact that only 46 percent of the population under 25 years old are currently employed.”