President Barack Obama’s proposal to raise the federal minimum wage from $7.25 to $10.10 per hour by 2016 is shaping up to be a defining electoral issue for 2014.
In Wisconsin, the proposed hike divides the two gubernatorial candidates. Incumbent Republican Gov. Scott Walker opposes raising the minimum wage, while Democratic challenger Mary Burke supports it.
Speaking to a recent meeting of the Wisconsin Grocers Association, Walker said the proposed minimum wage hike is a “misguided political stunt.” Doing so, he said, would eliminate entry-level jobs and cut pay for other workers.
“If you want to put a buzz saw on the economic recovery we’ve seen in this state, you just start piling on regulations like increasing the minimum wage,” Walker said.
However, Burke said, “The research shows in states that have raised the minimum wage above the federal wage that it has absolutely no impact on unemployment rates.”
A Marquette University Law School poll recently showed 62 percent of Wisconsin residents favor raising the minimum wage.
A recent report by the nonpartisan Congressional Budget Office projected mixed economic impacts from such a raise. The CBO said raising the minimum wage would lift about 900,000 Americans out of poverty, but would also kill off about 500,000 jobs.
“Some people would have higher wages and keep their jobs, but others would lose their jobs,” said economist Michael Knetter, the president of the University of Wisconsin Foundation, who provided economic insights for former Presidents George H.W. Bush and Bill Clinton. “I really don’t like the idea of a national minimum wage. The cost of living in Rhinelander is a little different than Manhattan. Why would they have the same minimum? By the CBO logic, a national increase to a higher level would raise wages of people in high cost areas who probably would not lose jobs, but might actually destroy jobs for lots of people in poor, rural areas where $10.10 per hour is simply more than the business can afford and more than the employee can earn in their best match.”
A new report from COWS (Center on Wisconsin Strategy), which bills itself as a nonpartisan national think tank in Madison, projected that a raise in the minimum wage would provide pay hikes for more than a half-million Wisconsin workers.
“Raising the minimum wage puts money in workers’ pockets and establishes a stronger standard for minimal work. It also would provide a modest boost to the economy,” said Laura Dresser, COWS associate director. “In fact, the wage increases would boost economic activity by an estimated $517 million over the course of the increases. That growth would generate 3,800 jobs as businesses expand to meet the consumer demand.”
Craig Culver, co-founder and chief executive officer of Sauk City-based Culver’s Restaurants, is proposing a compromise that he believes could attract bipartisan support. Culver says he is in favor of raising the minimum wage to $10.10 per hour – or even higher – if there is a separate, lower minimum wage for young people.
“What I would like to see done is a two-tiered minimum wage, a youth wage,” Culver told Wisconsin Public Radio. “(For) those 14-, 15-, 16-, 17-year-olds, a wage for them, and that could be what it currently is, or $8 an hour or something like that, $8.50 an hour. Then a wage for those 18 and older, or 19 and older … and that could be $10.10 an hour, that could be $12 an hour.”
A letter signed by nearly 600 economists, including seven Nobel prize winners and eight past presidents of the American Economic Association, stated, “The weight of evidence now (shows) that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market.”
