Mr Obama wants to raise the minimum wage and so do many economists. It is time to do this now. A raise in the minimum wage puts money into the pockets of low income workers who will spend it in the local economy, and thus help build a sustainable economic recovery.
As Dean Baker notes:
Let's do the right thing and raise the minimum wage now.The federal minimum wage was first put in place in 1938. From that year until 1968 when its value peaked, the purchasing power of the minimum wage increased by more than 140 percent. As a result, minimum wage workers saw a sharp increase in their living standards. Over this 30 year period, low wage workers shared in the gains of the economy as a whole as the minimum wage rose in step with productivity growth.
If workers at the bottom had continued to share in the economy’s growth in the years since 1968 as they had in the three decades before 1968, we would be looking at a very different economy and society. If the minimum wage had risen in step with productivity growth it would be over $16.50 an hour today.That is higher than the hourly wages earned by 40 percent of men and half of women