Minimum Wage to Increase?

By Matthew Rupel

Working students might be seeing dollar signs in their eyes.

Even though California's minimum wage is already above the federal rate of $7.25 an hour, it's a dollar short of President Barack Obama's call to raise the minimum wage to $9 an hour and boost it annually to keep pace with inflation. Ten states make similar cost-of-living adjustments. In the county of San Francisco, workers earn at least $10.55 an hour, the highest minimum in the country.

In all, 19 states and the District of Columbia have minimum wages set above the federal rate of $7.25, a disparity Obama highlighted in his State of the Union address as he seeks to help the nation's lowest paid workers. The minimum wage in California currently stands at $8 an hour.

Obama's proposal is renewing the age-old debate between advocates who claim boosting the minimum wage pumps more money into the economy and helps to create new jobs, and business groups that complain it would unfairly burden employers and curb demand for new workers.

And it faces certain hurdles in Congress, as top Republicans including House Speaker John Boehner wasted little time dismissing the proposal.

More than 15 million workers earn the national minimum wage, making about $15,080 a year. That's just below the federal poverty threshold of $15,130 for a family of two.

Obama sold his plan to a crowd in Asheville, N.C., on Wednesday, saying that it's time to increase the minimum wage "because if you work full-time, you shouldn't be in poverty."

Advocates say a minimum wage increase can lead to even broader economic benefits.

"These are workers who are most likely to spend virtually everything they earn, so it just pumps money back into local economies," said Christine Owens, executive director of the National Employment Law Project, a worker advocacy group.

But William Dunkelberg, chief economist for the National Federation of Independent Business, said the increase would hit businesses hard and only hurt workers by reducing demand for their services.

The Associated Press contributed to this report. Contact Matthew Rupel at mrupel@scu.edu or call (408) 54-4849.