Amid persistent high unemployment and a disconcerting economic outlook, ten states will raise their minimum wages this year. But economists looking for improving jobs numbers may be disappointed, since other recent minimum wage increases have corresponded with job losses for the least experienced and youngest workers who earn hourly wages.
Rhode Island will have the largest increase, by 35 cents per hour, making its new minimum wage $7.75 per hour. It is expected to directly affect 11,000 workers with annual pay increases of about $510 each.
Other states that have increased their minimum wages include Washington, Oregon, Ohio, Montana, Missouri, Florida, Colorado, Vermont, and Arizona. The average of all these increases is roughly 15 cents.
Missouri increased the minimum wage the least, by 10 cents, which is expected to bring 72,000 workers about $190 in 2013. Of all the states that increased the minimum wage, Missouri has the lowest cost of living.
The federal minimum wage was last increased in July 2009, to $7.25 per hour. Since then, national cost of living numbers have ticked upward. While the public consistently supports raising the minimum wage, the verdict is still out over whether it has a net positive impact on hourly workers and the economy.
“It’s not a cure-all to poverty,” Bob Pollin of the University of Massachusetts at Amherst told Marketplace.org. “In fact, the biggest source of low-income poverty is that people don’t have jobs at all.”
Apart from making it more expensive to hire low skilled workers, an increased minimum wage could make “[t]he prices of the products could go up,” Pollin noted. “And you will also see some reduction in the profits of the business owners.”
California, Illinois, and many other states have already implemented higher state minimum wages than the federal government’s requirement.
The National Employment Law Project, a labor advocacy group, contends that the minimum wage increases will result in a positive GDP impact of more than $180 million, and both directly and indirectly increase wages for nearly 1 million workers.
The last time the minimum wage was increased, however, nearly 600,000 teen jobs disappeared, despite a growing economy, as employers sought to offset rising labor costs by eliminating jobs held by their lowest-skilled and least-experienced employees.
“When you raise the price of anything, people take less of it, including labor,” Forbes contributor William Dunkelberg writes. “Workers of all ages that are relatively unskilled are adversely impacted by this policy.”
“The impact of raising the minimum wage in 2009 on teen employment makes it very clear that this is especially harmful for young teen workers looking for their first opportunity to have a job. ”
The current unemployment rate for youth workers is 11.5 percent, a number that is even higher among young minorities.
“The fact is that 2012 marked yet another year in which Millennials were unable to find real opportunities in the vocations for which they were trained and are qualified,” said Matthew Faraci, senior vice president for communications at Generation Opportunity, a grassroots organization that advocates for young voters.
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