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The bare minimum

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In what is an annual tradition, the White House typically releases sections of the president’s State of the Union address in the lead-up to the speech itself.

But judging from the reaction in the House chamber, those in attendance — and by extension, the millions watching from home — did not predict Obama would call for the federal minimum wage to be hiked to $9 an hour.

The discussion is frequently entertained on both the state and federal levels; in fact, Democrats in the Connecticut General Assembly are currently in discussions over raising the state’s minimum wage from $8.25 to $9.75 in two increments over the next year and a half.

The question is, do we have a moral obligation to raise the minimum wage, and what would the consequences be? Would raising the minimum hourly salary in fact lead to fewer job openings, as many contend? Or would businesses hire based purely on internal need, regardless of where the minimum wage stands?

Obama, addressing the joint session of Congress, said, “We know our economy is stronger when we reward an honest day’s work with honest wages. But today, a full-time worker making the minimum wage earns $14,500 a year. Even with the tax relief we’ve put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong.”

We wholeheartedly agree. The Business Journal feels that the state legislature and the Congress have moral obligations to raise the national and Connecticut minimum wage levels and to align any future increases with increases in the cost of living.

The current $7.25 federal minimum wage has been in place since July 2009, while Connecticut’s minimum of $8.25 came into effect Jan. 1, 2010.

Since those last increases, the cost of living, as measured by the U.S. Labor Department’s Consumer Price Index (CPI) has gone up every year.

After virtually no increase in 2008, the U.S. CPI increased 2.7 percent in 2009, 1.5 percent in 2010, 3 percent in 2011 and 1.7 percent last year.

Natasha Pierre, policy and legislative director of the Connecticut Permanent Commission on the Status of Women, recently told the Business Journal that in Connecticut, a resident would need to earn $10.56 an hour on a full-time basis to cover the cost of basic needs. To cover basic needs with a moderate amount of emergency savings, an individual would need to earn more than $17 an hour, Pierre said.

“If we want workers to succeed and be able to support themselves and their families, we have to create a realistic floor on wages,” Pierre told the Business Journal. “Not one that leaves working adults and their families at or below poverty.”

That is not to say the case against raising the minimum wage is invalid, particularly during times of economic stress and slow growth. Moreover, the question of raising the minimum wage cannot be confined to morals.

Andrew Markowski, Connecticut chapter director of the National Federation of Independent Business (NFIB), said in a Feb. 5 statement, “Connecticut’s economy lags behind most other states even as some national trends are beginning to turn upward. Its unemployment rate remains stubbornly high and small businesses here, which have traditionally created the most jobs, are finding it harder to bear the high taxes and costly mandates already in place.”

Markowski continued, “Raising the minimum wage again will harm businesses and job seekers in Connecticut who are already at a disadvantage.”

And so we must take steps to ensure that does not become the case, and that raising the minimum wage leads to economic growth.

By raising the minimum wage, both the state and federal governments would see increased income tax revenues, which in turn could be used to provide additional incentive dollars to businesses that hire new employees.

The combination of more hiring and higher wages would result in more spending, and with consumer spending representing 70 percent of all U.S. economic activity, that is not a factor to be taken lightly.

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