Impact of the President’s Increase in the Minimum Wage Rate

Advocates of President’s Obama’s are of the opinion that his proposal to increase the minimum wage for contract workers and other workers is because he feels that these workers are paid starvation wages according to Bernie Sanders who is an independent for Vermont. The president is seeking to restore confidence in his leadership and he said that he would use his executive power to bridge the gap between the haves and the have-nots which would in effect speed the nation’s economic recovery. President Obama said this in State of the Union speech on January 28^th, 2014.  According to estimates roughly 200.000 would directly benefit from this wage increase. The executive order would increase the minimum wage from $7.25 to $10.10 per hour and would apply to service workers in federal building such as the people who do laundry at military and those cleaning the floors at post office. Usually federal contact workers are paid a low minimum wage. The purpose of this wage increase is to show the president as an ardent supporter of struggling Americans.

            Despite statistics showing that the increase in the minimum wages will only increase unemployment, advocate contend that all this talk about increasing unemployment is just scare talk because according to them unemployment was never caused by the minimum wage rates. Small businesses also support the minimum wage increase because they feel that very low wages paid at corporate chains like McDonald’s and Wal-Mart do not give local communities the spending power for sustaining consumer demand said Christine Owens who is the Executive Director of the local employment project. Last week advocates released a national poll of small business owners which found that more than 57% of small businesses support the Obama Administration’s minimum wage increase. The poll was commissioned by the Small Business Majority, which is an advocacy group for small businesses. They strongly believe that an increase in the minimum wage would promote consumer spending and would definitely create greater economic growth.