The principal argument of business groups against minimum wage increase is the resulting effects on operating cost, which will inevitably lead to an eventual lack of competitiveness - primarily from product price increases to absorb the cost of labor. This in turn may lead to reduced market shares, and in some cases, bankruptcy. In either case, this contributes to lower hiring rate or retrenchment, which will burden the nation even more through unemployment and other ancillary social net mechanisms. A case can also be made that a national minimum wage structure is a precursor to socialistic statism.
Of course, on the flip side, advocates of a national minimum wage increase point out that too often businesses hide behind the profitability argument, ignoring the fact that people must be fairly compensated for their contributions to a company, and should not be expected to sacrifice for large enterprises. Asking workers to accept lower wages is akin to asking the average worker to bear the burden of subsidizing the operating costs of big businesses. There is also the fear that businesses may engage in cartel-like behaviors to set an 'appropriate' wage structure, instead of allowing market forces to naturally determine wages through economic forces.
Federal Minimum Wage
(Legislated under the Fair Labor Standards Act of 1938 and Fair Minimum Wage Act of 2007)
$7.25 w.e.f July 24, 2009
States With Minimum Wage Equal to the Federal Government ($7.25)
States, No Minimum Wages
Alabama, Louisiana, Mississippi, South Carolina and Tennessee
States, Less Than Federal Minimum Wage
States, Higher Than Federal Minimum Wage
2012 Libertarian Presidential Nominee
Former Governor of New Mexico
The former New Mexico governor is against the idea of having a national minimum wage policy, as he feels that a uniform minimum wage rate across the country does not take into account the difference in living costs between regions and its respective local job market, while potentially causing some industries to lose their competitive edge. Johnson points out that a majority of states already have their own minimum wage policy that could be rewritten in the face of new market changes.
President Obama is a strong advocate of raising the federal minimum wage. In 2008, he announced the goal of increasing the federal minimum wage by a whopping 31% to $9.50 by 2011. He has unfortunately failed to meet the objective until today.
Raise the Minimum Wage to $9.50 an Hour by 2011: Barack Obama and Joe Biden believe that people who work full-time should not live in poverty. Even though the minimum wage will rise to $7.25 an hour by 2009, the minimum wage's real purchasing power will still be below what it was in 1968. As president, Obama will further raise the minimum wage to $9.50 an hour by 2011, index it to inflation and increase the Earned Income Tax Credit to make sure that full-time workers can earn a living wage that allows them to raise their families and pay for basic needs such as food, transportation, and housing -- things so many people take for granted.
The Agenda, Change.gov; The Office of the President Elect
“As the homecare business has changed over the years, the law hasn’t changed to keep up. So even though workers like Pauline do everything from bathing to cooking, they’re still lumped in the same category as teenage babysitters when it comes to how much they make. That means employers are allowed to pay these workers less than minimum wage with no overtime.
That’s right. You can wake up at 5:00 in the morning, care for somebody every minute of the day, take the late bus home at night, and still make less than the minimum wage. And this means that many homecare workers are forced to rely on things like food stamps just to make ends meet.
That’s just wrong. In this country, it’s unexcusable. I can tell you firsthand that these men and women, they work their tails off, and they don’t complain. They deserve to be treated fairly. They deserve to be paid fairly for a service that many older Americans couldn’t live without. And companies who do pay fair wages to these women shouldn’t be put at a disadvantage.”
December 15, 2011, Eisenhower Executive Office Building: President Obama announcing a new legislation that ensures the 1.8 million home-care workers in the country are accorded the minimum wage and overtime protections offered under the Fair Labor Standards Act.
Romney appears to have had a 180 degree turn on the issue within the space of three months. At a campaign event in New Hampshire in January, Romney was supportive of increasing the minimum wage. However, in March, Romney seems to have had a change of heart during an appearance on The Kudlow Report .
“My view has been to allow the minimum wage to rise with the CPI or with another index so that it adjusts automatically over time.”
Question: So you’d support that as president?
Romney: I already indicated that when I was governor of Massachusetts and that’s my view.
Jan 7 2012: Romney answering a question during a campaign event before the New Hampshire primary
“Larry Kudlow: All right, last one. It's an economic question. A lot of conservatives, led by The Wall Street Journal editorial page, were horrified when you said you want to index the minimum wage for inflation. And they said, `Look, that's just going to raise the minimum wage. That's going to raise the unemployment rate, especially for young people, especially for minorities. It's sort of a little bit of unfinished business.' Why do you want to raise the minimum wage? Why do you want to index it for inflation?
Mitt Romney: Well, actually, when I was governor the legislature passed a law raising the minimum wage. I vetoed it… And I said, `Look, the way to deal with the minimum wage is this. On a regular basis,' I said in the proposal I made, `every two years we should look at the minimum wage, we should look at what's happened to inflation. We should also look at the jobs level throughout the country, unemployment rate, competitive rates in other states or, in this case, other nations.' So, certainly, the level of inflation is something you should look at and you should identify what's the right way to keep America competitive…
… Yeah, so that would tell you that right now there's probably not a need to raise the minimum wage. What I can tell you is had one indexed the minimum wage back to, let's say, 1990, the minimum wage would be lower now than it actually is. Democrats make big hay of this every few years, `Oh, we're going to raise the minimum wage', and get a lot of hoopla for it. Frankly, the right way to process it is to look at the minimum wage, look at how unemployment rates are, make adjustments as time goes on based upon our need to compete, the need of the job market, and, of course, what's happened to inflation.”
Paul is against the concept of a federal minimum wage, arguing that it is yet another form of government mandate.
“John Harris: Another question from a Politico reader. Do you advocate getting rid of the minimum wage, would that create more jobs?
Ron Paul: Absolutely. It would help the poor people who need jobs. Minimum wage is a mandate. We’re against mandates so why should we have it? It would be very beneficial…
… Mandates, that what the whole society is about, that’s what we do all the time. That’s what government is - mandate, mandate, mandate. We talk so much about the Obama mandate which is very important, but what about Medicare? Isn’t that a mandate? Everything we do is mandate. So, this is why you have to look at this, the cause of liberty. We don’t need the government running our lives.”
September 7, 2011, Ronald Reagan Library: Reagan Republican Presidential Debate
"Any time government interferes with business, the result is bad for business—therefore, bad for consumers, and ultimately, bad for the people the government was trying to help. America needs jobs badly. Minimum wage laws prevent business owners from creating job opportunities."
• Vern Wuensche believes that the minimum wage should be eliminated letting the free market set rates.
• Vern Wuensche believes that the minimum wage only serves to prevent the most disadvantaged members of our society from being hired, thereby preventing them from gaining the skills necessary to improve themselves.