Unemployment

Unemployment

Kevin Haste and Michael Strain from the Los Angels Times argue that a wage will make it more expensive for employers to hire workers, leading to more unemployment. Companies will then find cheaper ways like cutting workers’ hours or eliminating jobs. A higher unemployment rate means more people dependent on food stamps or other government aid programs. You increase your menu prices and you reduce hours,” he said. “People who come in normally at 9 o’clock in the morning, you try to get them to clock in at 9:30 and save half an hour. We also stopped hiring people. You can’t stay in business if you don’t. Other small businesses, though, were quick to point out that their pay was already at or near $9 an hour, so it would not be a death knell by any means. “l am sure it’s going to affect us a little bit. There would be cutbacks in certain things, less company dinners or whatever,” said Victor Unguent, assistant manager at the long-standing men’s clothing shop Union in Los Angels. “But it’s expensive to live here, so if it did change, I’m sure the workers would be happy. [And] in the grand scheme of things, we’re not closing down next eek if we give people another 75 cents or a dollar more,” he said.

Some agreed with Obama that in the long run, a raise for those at the bottom would be good not only for the working poor but for their own buss nesses. “On balance it could be a positive thing because people will have more disposable income, like students and people working at fast-food or retail stores,” said Dove Charley, chief executive of American Apparel Inc. The Los Angels manufacturer and retailer typically pays its garment makers more than the state minimum wage. “If the wage is raised, we will be able to sell more because young people and people increasing in terms of their earning power will be able to buy more,” Charley said.

Beam’s proposal was part of an overall theme Tuesday night to bolster the middle class and narrow what has become an increasing wealth gap in the nation. He noted that 19 states already had set higher minimum wage requirements than the federal law. Washington state’s is the nation’s highest at $9. 19. Raising the federal rate to $9 an hour, the White House estimated, would lift the incomes of at least 15 million workers. “Even with the tax relief we’ve put in place, a family with two kids that earns he minimum Wage still lives below the poverty line,” Obama said. ‘That’s wrong. The federal minimum wage has gone up 14 times since 1 970, the latest in August 2009, when it went up to $7. 25 from $6. 55 a year earlier and $5. 85 in August 2007. Obama supported a $9. 50-an-hour minimum wage when he was campaigning for president in 2008 but has been largely silent on the issue since. The renewed push reflects an effort to do something about the nation’s problem Of stagnant incomes and a poverty rate that has risen during the Great Recession to 15% of the country’s population. Obama probably received solid backing on the idea from the chief of his Council of Economic Advisers, Alan Krueger.

As a Princeton professor with economist David Card of Berkeley, Krueger did case studies that found that raising the minimum wage did not lead to increased unemployment. But a larger and longer-running body of academic work, notably by David Marker of SIC Irvine, found that increasing minimum wages led to a moderate decline in employment for low-skilled workers. What’s more, his research suggests that a chunk of the gains in higher wages ay go to middle-class teenagers, with some adults getting squeezed by a reduction in jobs or hours.

Harry Holler, a Georgetown University labor economist, also was concerned about the timing. He noted that only 3 1/2 years have passed since the government last raised the minimum wage, too soon given the current economic conditions. Small employers have lagged in job creation, largely because of weak sales but also because of uncertainties in the economic and political climate. “l personally wouldn’t want to give them one more reason to sit on the sidelines,” he said, “even if the effect is modest. “

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