What Will Happen To The Economy If Minimum Wage Goes Up To $9/Hour?
In recent discussion, president Obama announced that one of his goals is to raise minimum wage from it’s current $7.25/hour level, to $9.00/hour by 2015. This would mean an increase in wages for 15 million Americans. This could have a wide array of impacts that could be both positive and negative for the U.S. Economy.
Higher Minimum Wages Means More Expendable Income
One perspective is that if the minimum wage were to be raised to $9.00/hour, there would be overall more expendable income that can flow from the individual directly back into the economy. The current minimum wage for a full-time employee equals $14,500/year, which is well below the poverty line for a family of 4. The raise would take that to $18,000/year, which is still below the poverty line, but is much improved compared to its current level. One study indicates that by even raising the minimum wage by $1/hour, it translates to an extra $2,800/year that will get put back into the economy per full-time minimum wage employee. Ultimately, the goal is that no full-time worker should have to live at or below the poverty line.
Higher Minimum Wage Could Cause Job Loss
On the flip-side, many argue that the higher minimum wage will have a negative impact on unemployment because many businesses either can’t or won’t absorb the extra cost of paying workers higher wages. One federal study indicates that there would be as many as 467,500 jobs lost if wages were to go up to $9/hour.
Wages Must Increase To Keep Up With Inflation
However, one thing is fairly clear, wages must increase in order to keep up with inflation. According to statistics on wages and inflation the current minimum wage should already be at $10.56/hour to keep up with inflation and higher cost of living expenses. $9.00/hour is simply a stepping stone in keeping wages current with expenses.
There are many things brewing that could seriously impact the economy and the workers in this country. For more information on how higher minimum wages will impact the economy, and your investments speak to a redhawk advisor near you or visit redmoneyupdate.com