In his State of the Union address, President Barack Obama called for a raise in the federal minimum wage from $7.25 an hour to $10.10 an hour. Thatís quite a jump. While itís a hot sound bite for the president, the reality is that a mandatory higher minimum wage poses a risk to the U.S. economy, and bad for the very people it is intended to help.
There is little data supporting the notion that artificially forcing higher wages stimulates economic growth or creates jobs. In fact, study after study shows raising the federal minimum wage creates job loss.
This time around, as many as 1.1 million U.S. jobs are on the line if the presidentís proposal is enacted, according to the Employment Policies Institute, which studies employment growth in America.
Efforts to raise the minimum wage are also taking place in several states, including Michigan.
A state coalition submitted proposed ballot language Monday to the Secretary of State to raise the stateís minimum wage to $9.50 per hour in three phases by January 2016.
Michiganís minimum wage is already higher than the federal minimum at $7.40 per hour.
Raising the minimum wage also disproportionally hurts the people itís supposed to help.
The president has focused his rhetoric on reducing poverty, but his proposal would diminish access to opportunity and a better quality of life by making the lower rungs of the economic ladder less accessible to the low-skilled, entry-level workers who traditionally make up the minimum wage workforce.
And for those in poverty who are not currently working, an increased minimum wage will have no positive effect.
By decreasing economic output across the board, it will raise prices of food and other necessities and further stifle a national economy that has tried to inch upward in the past year.
Supporters of raising the minimum wage canít dismiss the fundamental reality that the best way to raise wages and help people out of poverty is to increase the demand for labor. The way to increase that demand is to encourage the market to grow and create new opportunities for work by instilling public policies that stimulate ó not stifle ó the creation of new enterprises.
While the economic downsides are the same for a statewide wage increase, this is a more palatable option.
Allowing individual states to set their minimum wages rightly gives room for local input, decision-making and greater flexibility to respond to the needs of the people in each state.
But with Michigan unemployment holding at 8.4 percent, our state should focus on increasing the number of jobs available rather than artificially inflating the value of work today.
National and state leaders should tailor policies that would help those in poverty without damaging a limping U.S. economy. For example, the earned income tax credit is a better option.
To help every American have a chance at success, the focus should be on policies that create more jobs and opportunities.