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Congress Debates Minimum Wage Hike

U.S. law has guaranteed most workers a minimum wage since the 1930s. The last increase in the wage was in 1997. Now Democrats in the U.S. Congress say it's time for another raise.

Minimum wage workers in America: food service, hotel workers, security guards, and sales clerks all earn at least the federal minimum wage of $5.15 per hour, a figure set in 1997. But Democrats in Congress are arguing that figure has not kept up with the times.

Jared Bernstein is a senior economist with the Economic Policy Institute. "The role that it plays is that it provides a modicum of wage support for our lowest wage workers, many of whom are the most disadvantaged workers in our society. And if you look at who earns the minimum wage, you are going to find that it is disproportionately minorities."

Economic Policy Institute statistics predict a minimum wage increase would affect about 15 million people in a workforce of 150 million. Only a few million workers actually depend on minimum wage jobs as their sole source of income.

William Niskanen is chairman of the CATO institute, a policy center in Washington D.C. He is opposed to raising the minimum wage. He says it's bad economic policy. "It increases the price of hiring low skilled labor. That leads employers to do two things. One is to hire less low skilled labor. A second is that it leads them to economize on non-wage compensation and working conditions."

Twenty states in the U.S. have set their minimum wage higher than the $5.15 per hour mark. Jared Bernstein argues that figure is not a livable wage in today's economy. "The economy looks great from 40,000 feet, but on the ground, you have got some problems. We have quite strong growth in gross domestic product, which is a measure of economic growth. Productivity growth has been really quite stellar. But the wages and incomes of folks on the bottom half of the scale have been plodding along and in many years and quarters have been falling behind inflation."

Bernstein does not believe raising the minimum wage will result in job losses. He argues that jobs were added after the last increase in 1997. "We have just never found these job loss effects. It is just an argument that completely lacks evidence."

William Niskanen says improving the educational opportunities for low income families is a better way to fight poverty than raising the minimum wage.

"The United States spends way more for public schooling than any nation in the world. And we place 15th, 20th in international tests in reading and mathematics. We have compared to the rest of the world a very poorly performing public school system."

Democrats are using the issue to rally their base for the upcoming midterm congressional elections. Recently they threatened to block a congressional pay hike if Republicans would not relent on the issue. They say congressional salaries have raisen almost $32,000 a year since the last increase in the minimum wage