Study: A Minimum Wage Hike Would Stimulate The Economy

[Bill USA]

http://thinkprogress.org/economy/2013/07/08/2256851/study-a-minimum-wage-hike-would-stimulate-the-economy/#

A federal minimum wage increase would likely benefit the U.S. economy, a new Chicago Fed Letter suggests. Daniel Aaronson and Eric French, economists at the Federal Reserve Bank of Chicago, provided an estimate of the effects on aggregate household spending of the $9 minimum wage Obama proposed in his 2013 State of the Union Address.

The authors found that raising the wage by $1.75 would increase household spending by about $48 billion the following year, which amounts to .3 percent of GDP. If the possibility of job losses is taken into consideration, the authors calculate that spending would still go up by $28 billion, or .2 percent of GDP. However, most studies suggest minimum wage hikes do not result in job losses for various reasons.

Because minimum wage earners tend to be low-income and are likely to spend more of their income, raising their wages is particularly beneficial. As the authors explain, “In the near term, a minimum wage hike can stimulate economic activity by putting money into the hands of people who are especially likely to spend it.”

These findings run contrary to Republican opposition to a raise in the wage. Almost immediately after President Obama proposed an increase, Speaker of the House John Boehner (R-OH) rejected the idea, citing potential economic harms as his primary concern. Republican aversion to the minimum wage seems to have grown since then, as Lamar Alexander (R-TN) recently suggested the minimum wage should be abolished.
(more)

[Warpy]

1. Water is wet

What dogmatic idiots like Lamar Alexander need to have their noses rubbed in until they understand it is that 40+ years of depressing wages did not eliminate inflation. All it did is put the economy on life support, first with consumer debt and now with public assistance supplementing starvation wages so that workers are not dying on the job.

Or engaging in outright revolution.

[livingwagenow]

2. Bears shit in the woods. knr nt