Raising minimum wage won't help average worker,university economist says

Thursday, November 2, 2006

One of the biggest national issues in next week's election is whether or not to raise minimum wages

Five states - Colorado, Missouri, Montana, Nevada and Ohio - have measures on the ballot to raise their state's minimum wage. But the director of the University of North Texas Center for Economic Development and Research says raising the wage won't help the average worker.

"My personal view is that it's a bad idea," says Dr. Bernard Weinstein. "It doesn't really help raise overall wages, and it prices people out of the market who have low levels of ability and educational attainment. The percentage of people who actually earn the minimum wage is very low, even in those places where the state or local minimum wage is higher that the federal one."

Twenty-two states, the District of Columbia, and several major cities already have state minimum wages higher than the federal level of $5.15 an hour, which was set in 1997.

Texas' minimum wage law ties it to the federal minimum wage. The state of Washington has the highest minimum wage in the country, $7.63 an hour, while five states have no minimum wage law at all.

Weinstein points out that in this election season with a number of tight races, talk about raising the minimum wage may be a strategy to engage parts of the electorate.

"Wages understandably vary from company to company, and from labor market to market. In states with low unemployment rates, you typically find higher minimum wages. Many states now have minimum wage laws higher than the federal minimum wage," he says.

Weinstein thinks the talk about raising the minimum wage is a "stalking horse" for an old idea: a guaranteed minimum income for each American worker.

"The idea was last proposed in the 1970's, when Richard Nixon was president, but it hasn't been considered since," he says.

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