Will Raising Minimum Wage Hurt Or Help The Economy?

Money

That’s the question posed by a recent NPR story that examines the arguments for and against raising the minimum wage from $7.25 an hour.

Business groups say that raising the minimum wage discourages job creation. For example, the National Restaurant Association says that a federal wage hike would “cause restaurant operators to make very difficult decisions to eliminate jobs, cut staff hours or increase prices.”

But labor advocates say that if workers don’t get raises, consumer spending stagnates: “This is a critical part of recovery — to help people have more money to spend,” said Jen Kern, minimum wage campaign coordinator for the National Employment Law Project.

Even academic studies are inconclusive, NPR says. Some studies show that the National Restaurant Association and others like it are correct, while others show that a higher wage will stimulate spending without costing any jobs.

The good news: Seventeen states and the District of Columbia already have minimum wages set higher than the federal law.