Washington -- Only five other states would be impacted more by President Barack Obama's proposal to raise the minimum wage to $9 an hour from the current $7.25. Louisiana has a poverty rate of 32.3 percent, sixth highest among the 50 states, with Mississippi leading the way in this dubious distinction. Many breadwinners in families living in poverty earn...
Washington -- Only five other states would be impacted more by President Barack Obama's proposal to raise the minimum wage to $9 an hour from the current $7.25. Louisiana has a poverty rate of 32.3 percent, sixth highest among the 50 states, with Mississippi leading the way in this dubious distinction.
President Barack Obama, flanked by Vice President Joe Biden and House Speaker John Boehner of Ohio, gestures as he gives his State of the Union address during a joint session of Congress on Capitol Hill in Washington, Tuesday Feb. 12, 2013. (AP Photo/Charles Dharapak, Pool)
Many breadwinners in families living in poverty earn minimum wage or slightly above.
"Even with the tax relief we've put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That's wrong," the president said in his State of the Union message Tuesday. "Let's declare that in the wealthiest nation on earth, no one who works full time should have to live in poverty."
One key provision of the president's proposal for a service industry reliant state like Louisiana is an increase in the minimum wage for workers who rely on tips, such as waiters and waitresses, It would increase the current rate of $2.13 an hour for the first time in 20 years, though details of by how much have not yet been released.
The president's proposal would also raise the minimum wage in the future automatically, based on the cost of living index.
The president's plan calls for a $9 basic minimum wage to take effect in 2015.
Proponents argue that not only will a higher minimum wage increase buying power for low-income Americans, but also reduce the subsidies taxpayers provide to make low-income jobs viable: the higher people's wages, the lower the cost of food stamps, the lower use of the federal Medicaid system, and fewer hits on tax revenue by the earned income tax credit designed to make even low-wage work, pay.
But there's a lot of opposition from businesses that will see costs increase with the first increase in the minimum wage since 2007.
"A typical restaurant operates on an average of 3-4 percent pretax profit margin, and more than 90 percent of restaurants are small businesses," said Scott DeFife, executive vice president of the National Restaurant Association. "Any additional labor cost can negatively impact the ability to hire or maintain jobs, and at this time, there is a great deal of pressure on all labor-intensive industries to examine their benefits structure in the light of the 2010 health care legislation being implemented."
But Tsedeye Gebreselassie, staff attorney for the liberal National Employment Law Project, said studies show that the 19 states with higher minimum wage levels than the $7.25 federal rate enjoy better job growth than states without a higher minimum wage. One reason: People have more money to spent on food and products offered by the small businesses, more than making up for the higher wages.
Gebreselassie said the timing of the minimum wage couldn't be more important. Most job growth over the last few years have been for low-wage jobs, such as in the service industry.
President Franklin Roosevelt implemented the first minimum wage - 25 cents an hour - in 1936 during the Great Depression. Through the 1970s, the minimum wage went up fairly regularly to adjust to inflation.
But over the last three+ decades increases have become much less frequent. The last one was in 2007, when it was increased to $7.25, the rate today.
In 1968, adjusting for inflation, the rate would be equal to $10 with today's cost of living.
But timing is important, said House Speaker John Boehner, R-Ohio, who argues that a bad economy isn't the time to increase costs for business.
"When you raise the price of employment, guess what happens?" Boehner said. "You get less of it."
In the current debate, the two sides can't even agree on who makes the minimum wage. Proponents of an increase say most are adults, many raising money for their families; while opponents said most who get the minimum wage are teen-agers, new entrants into the workforce or spouses or retired people looking for part-time income.
One issue that both sides agree on is that raising the minimum wage would affect more people than those who make less than $9 an hour. Fulltime workers who make the minimum wage now earn $14,500, but when the minimum wage goes up, often even higher paid workers see incomes go up.
This is a good thing, according to the president, because it will give Americans more spending power. For a family of four earning between $20,000 and $30,000 the White House said, it will provide enough money to buy groceries for a year, or cover the cost of utilities.
Michael Strain, a research fellow at the conservative American Enterprise Institute, said the most likely impact will be fewer jobs.
"Our labor market is in a national emergency," Strain wrote in a column this week. "Ideally our government would be implementing policies to help workers get jobs. But surely the government should not actively increase the cost of hiring workers."
In Louisiana, according to the 2010 Census, 165,466 workers earn less than $10,000 a year; while 118,275 earn between $10,000 and $14,999 and 213,863 earn between $15,000 and $24,999.