Proposal to Raise the Minimum Wage

Proposal to Raise the Minimum Wage

Paul Krugman praised the President’s call to raise the minimum wage.  Mr. Krugman is not only a cogent opinion writer for the New York Times, but also an economics professor and a recent winner of the Nobel prize in economics.  So if he endorses the minimum wage hike, it is worth a look.

The federal minimum wage is very low, at $7.25 per hour.  But many states, Maryland included, have a higher minimum wage, at least for some jobs.  And using the state differences as a laboratory, economists like Krugman conclude that raising the minimum wage has a positive effect on jobs.

It could be as simple as Henry Ford’s famous experiment in paying workers more than the going rate.  By giving automobile employees higher wages than his competitors paid, he enabled them to buy cars.  Fords, of course.

In a similar way, the minimum wage workers making a little may be able to use more of their money at fast food places, grocery stores, gas stations, other places where minimum wages might prevail, thereby allowing more hires.

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