In his State of the Union address, US President Barack Obama reignited a perennial debate in his proposal to increase the minimum wage from its current level of $7.25 an hour to $9.00 an hour. Advocating for the move, Obama argued that “this single step would raise the incomes of millions of working families. It could mean the difference between groceries or the food bank; rent or eviction; scraping by or finally getting ahead. For businesses across the country, it would mean customers with more money in their pockets.” To Obama, the case for the minimum wage is rooted not simply in compassion, but also in its consequences for demand: more money in people’s pockets will lead to increased spending, aggregate demand, and – eventually – profits.
Dr Wes Widmaier discusses the benefits and consequences of Obama’s latest pledge in The Conversation. You can read the whole article here: http://theconversation.edu.au/obamas-pledge-to-raise-the-minimum-wage-is-good-policy-12258