The Potential Impact Of Increasing The Minimum Wage

People who work for the minimum wage in 18 states are getting a raise on Jan. 1. From Alaska to Maine, increases range from 4 cents to a dollar.

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And the start of the new year will mean a raise for many low-wage workers across the country. Eighteen states are raising their minimum wage next week. Some of the biggest increases will be in Colorado, Hawaii, Maine and New York. But some business leaders are worried that raising the minimum wage will cost jobs. Here's NPR's Joel Rose.

JOEL ROSE, BYLINE: Susie Hubbard (ph) works at a laundromat in Westbrook, Maine, outside of Portland.

SUSIE HUBBARD: So I just cleaned out all the vents so that everybody's clothes dry at a good pace.

ROSE: When she was hired a few months ago, Hubbard earned just above the current minimum wage of nine bucks an hour. But with the minimum set to go up next week, her boss just gave her a raise to the new minimum of $10 an hour.

HUBBARD: I'll be very happy. I'll be very happy for everybody's wages to go up. I still find it very hard to struggle just taking care of myself. Never mind if I had a family. If I had a family, I'd be crunched.

ROSE: Advocates say that's exactly why the minimum wage needs to be higher. The federal minimum wage of $7.25 hasn't gone up since 2009, so many states and cities are taking matters into their own hands. The minimum wage in 18 states is going up on Monday. Those increases range from just 4 cents in Alaska to a full dollar in Maine. But skeptics warn that may have unintended consequences.

SYLVIA WALLINGFORD: The minimum wage going up is a very expensive thing for a small business that's seasonal.

ROSE: Sylvia Wallingford and her husband own Ernie's Cycle Shop in Westbrook. Wallingford says she often hires young people who start out at minimum wage. But this year, because of Maine's looming minimum wage hike, she couldn't afford to.

WALLINGFORD: I hired fewer people because I can't - you can't afford to promise everybody a certain number of hours regardless of whether we're busy or not.

ROSE: The minimum wage is also going up next week in Colorado to more than $10 an hour. This is the second big hike in two years. And Sonia Riggs of the Colorado Restaurant Association says that's hurting her industry, as she told Colorado Public Radio this week.

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SONIA RIGGS: We've seen a combination of increased prices. We have seen a change in staffing levels. They're really trying to be as efficient as they can - a decrease in hours.

ROSE: That's what concerns Michael Saltsman at the Employment Policies Institute. It's a conservative think tank that opposes big hikes in the minimum wage.

MICHAEL SALTSMAN: I think you will see an increased rate of businesses not being able to make the math work. It's a life-or-death issue.

ROSE: But most economists who've studied higher minimum wages say the effects on hiring are pretty slight.

MICHAEL REICH: I don't think the sky is going to fall.

ROSE: Michael Reich studies wages and employment at UC Berkeley. He's run the numbers on cities that have hiked the minimum wage above $10 an hour, including Chicago, San Francisco, Seattle and Washington, D.C. So far, Reich says, these minimum wage hikes have little to no effect on hiring.

REICH: All economists believe that at some point there could - will be negative effects, but we don't know where that minimum wage that would create negative effects is. It could be $20 or it could be 50.

ROSE: It's probably lower than 50 though, huh?

REICH: Probably, yes.

ROSE: Economists may get better answers to that question over the next few years as more cities and states push their minimum wages up towards $15 an hour. Joel Rose, NPR News, New York.

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