A large swath of economists agree, raising the minimum wage is a good idea.
In a letter released Tuesday through the Economic Policy Institute, a left-leaning think tank, 75 economists, including seven Nobel Laureates, argue that the government should hike the federal minimum wage from $7.25 to $10.10 an hour by 2016 and then peg future increases to inflation. A proposal from Senate Democrats, backed by President Obama, to raise the minimum wage to $10.10 an hour is currently stalled in Congress.
"At a time when persistent high unemployment is putting enormous downward pressure on wages, such a minimum-wage increase would provide a much-needed boost to the earnings of low-wage workers," the letter reads.
The effect of a minimum wage hike is one of the most hotly debated issues in economic research. Some argue that a boost in the wage floor would actually hurt low-wage workers because employers would be hesitant to hire if they had to pay their workers more. In the letter, the economists, including Joseph Stiglitz and Larry Summers, argue that the "weight" of the evidence indicates past minimum wage hikes haven’t hurt the job market.
"Research suggests that a minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front," the letter reads.
During the initial phase-in period of a $10.10 minimum wage, the U.S. economy would grow by $22 billion, according to a December analysis from EPI. The economic growth would result in the creation of 85,000 new jobs, the analysis concluded.
In addition to benefitting the economy overall, a minimum wage increase would go a long way in helping the workers who rely on bottom-barrel wages to make ends meet. Fast food, retail and other low-wage workers have taken to the streets over the past several months to argue that their minimum wage incomes aren’t enough to live on. It takes a wage of $10.20 an hour to survive even in America’s cheapest county, according to a 2012 analysis from Wider Opportunities for Women.
Raising the minimum wage to $10.10 an hour could lift about 5 million Americans out of poverty, according to a study released earlier this month by Arindrajit Dube, an economist at the University of Massachusetts-Amherst and one of the signatories of the letter.