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State leaders react to Obama's minimum wage proposal

CHARLESTON, W.Va. -- The president of the state Chamber of Commerce doubts President Barack Obama's plan to raise the minimum wage will have the economic impact Obama hopes.

"I didn't think it was a stellar idea to improve the economy," Steve Roberts said Wednesday.

During his State of the Union speech Tuesday night, President Obama recommended raising the federal minimum wage from the current $7.25 an hour to $9.

The president said individuals currently working full-time at the minimum wage make less than the federal poverty level and said their income should be raised to cover basic living expenses.

More than 15 million workers earn the national minimum wage, making about $15,080 a year. That's just below the federal poverty threshold of $15,130 for a family of two.

Obama also proposed indexing the federal standard to inflation so that it would automatically adjust in the future.

Should the proposal pass, it would be the first time the benchmark has been raised since 2009.

The president argued that this move would put more money into the pockets of lower income Americans, and thereby stimulate the economy.

Roberts didn't buy that argument.

He said he has already heard from some Chamber members -- particularly in the hotel sector -- who said they would be forced to lay off workers, should the wage mandate pass.

"I believe if the minimum wage goes up there are people who will lose their job, simply because some employers are barely hanging on," Roberts said.

"If business was good we wouldn't be having this conversation, but we're having this conversation in the context that business is bad," he said.

But Ted Boettner, executive director of the West Virginia Center on Budget and Policy, said the change is needed to get low-income workers' inflation-adjusted wages back in line with historic norms.

"Over the last thirty years, low-income workers have seen the price of goods and services rise while their wages have stagnated or declined," Boettner said.

He said when you adjust wages for inflation, a typical low-income worker made about 63 cents more in 1979 than in 2011.

"Far too many working families in West Virginia struggle to afford basic necessities like child care, rent, and food," Boettner said. "If anyone deserves a raise, it's the working poor."

The national Center for Economic and Policy Research released a study Wednesday that said modest increases in the minimum wage have a minimal impact on employment.

Center economist John Schmitt said in a press release accompanying the study that the negligible impact on employment is outweighed by the benefit of higher wages for those employed.

"An increase to $9.00 per hour would be hugely important for the workers getting it, but the idea that this would lead to less employment is just not supported by the evidence," Schmitt said.

Roberts said the effect of the minimum wage is often times overstated.

He said the majority of businesses pay workers far more than the baseline wage mandated by government.

"In so many cases employers tell us that if they pay them minimum wage at all it's only a training wage because people are likely to move up and make more," Roberts said.

While he agreed that workers should be paid more, Roberts said the government's focus should be more centered on job growth. He said those new jobs created by the private sector would likely be at wage levels in excess of $9 an hour.

Roberts said simplifying the tax code and offering incentives to create those types of jobs would have a greater impact on workers' overall standard of living.

"The best way to help (workers) is to stimulate growth," Roberts said. "The government isn't very good at mandating how an economy will work."

The Associated Press contributed.

Contact writer Jared Hunt at jared.hunt@dailymail.com or 304-348-5148.

 


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