Raising Minimum Wage?

Via WaPo: House Passes Increase in Minimum Wage to $7.25

The House yesterday overwhelmingly approved the first increase in the federal minimum wage in nearly a decade, boosting the wages of the lowest-paid American workers from $5.15 to $7.25 an hour over the next two years.

The 315 to 116 vote could begin the process of ending Congress's longest stretch without a minimum-wage increase since the mandatory minimum was created in 1938. In the past decade, inflation has depleted the value of the minimum wage to the lowest level in more than 50 years.

Not everyone is happy with the idea.

Republican leaders, backed by small-business lobbyists and restaurant groups, argued fiercely that raising the minimum wage would cripple the economy and must be accompanied by significant tax cuts for small businesses to lessen the effect on them. Rep. John Kline (R-Minn.) predicted that a wage increase "will leave recent economic growth dead in its tracks."

There is, however, reason to believe the nay-sayers are wrong. A related article in the New York Times, For $7.93 an Hour, It’s Worth a Trip Across a State Line, suggests:

Nearly a decade ago, when voters in Washington approved a measure that would give the state’s lowest-paid workers a raise nearly every year, many business leaders predicted that small towns on this side of the state line would suffer.

But instead of shriveling up, small-business owners in Washington say they have prospered far beyond their expectations. In fact, as a significant increase in the national minimum wage heads toward law, businesses here at the dividing line between two economies — a real-life laboratory for the debate — have found that raising prices to compensate for higher wages does not necessarily lead to losses in jobs and profits.

I think a minimum wage increase is a good thing. The more money that workers at the lower end of the pay spectrum earn, the more they are going to spend. That is a good thing, isn't it?