The Surprising Benefits of Raising the Minimum Wage

December 11, 2013 | Money Morning |

The notion of raising the minimum wage has moved back into the national spotlight courtesy of U.S. President Barack Obama, who last week called for an increase in the federal minimum rate from the current $7.25 an hour to $10.10.

It's an idea the president last mentioned publicly in his State of the Union speech in February, when he called for raising the minimum wage to $9 by 2015.

Last Thursday fast-food workers in 100 cities brought still more attention to the issue by staging a nationwide walkout/protest to criticize the current minimum wage level and call for an increase to $15 an hour.

Opponents - including many conservatives - see higher minimum wage as harmful for business. It's a policy conservatives routinely attack, claiming that increasing it will force businesses to cut jobs and raise prices - hurting the very people it is supposed to help.

But raising the minimum wage would not only benefit low-income workers, it would stimulate the U.S. economy and save the government billions of dollars. [...]

One of the primary objections from opponents of a minimum wage increase is that doing so will kill jobs and hurt profits, and by extension the U.S. economy.

But several studies, as well as some conservative thinkers, say that's backwards...

For example, a 2012 study by the non-partisan think tank Demos on the effect of raising the minimum wage on retailers found that U.S. gross domestic product could actually get a $15.2 billion boost, that 132,000 jobs would be created, and that the retailers would enjoy as much as $5 billion in additional revenue.

Read the report: Retail's Hidden Potential: How Raising Wages Would Benefit Workers, the Industry and the Overall Economy