Obama, business groups differ on minimum wage plan

By Sam Hananel

Associated Press

Published: Thursday, Feb. 14 2013 6:51 a.m. MST

Women represent nearly two-thirds of minimum-wage workers, while black and Hispanic workers represent a higher share of the minimum-wage workforce than whites, according to the Economic Policy Institute.

The last federal minimum wage increase was signed into law by President George W. Bush, when it increased from $5.15 to $7.25 in a three-step process between 2007 and 2009.

The last recession began in the middle of that process and took an especially heavy toll on middle-wage positions, which accounted for 60 percent of jobs lost in the crushing downturn. Most of the job growth since the 2010 recovery has been in low-wage jobs. Owens, for one, contends, "There's no compelling case to be made that raising the minimum wage triggered job losses."

Doug Hall, director of the liberal Economic Policy Institute, estimates that raising the minimum wage to $9 would pump $21 billion into the economy and lead to the creation of 120,000 jobs.

But Randel Johnson, vice president at the U.S. Chamber of Commerce for labor issues, said the increase would come "on the backs of employers," who would hire fewer people and cut overtime.

"You don't put new burdens on employers when they are trying to recover in a tough recessionary time," he said.

Johnson also warned against tying wage increases to inflation.

"Employer profits are not magically indexed somehow to always go up," Johnson said. "Congress needs to look at the validity of raising the minimum wage in the context of the economic times in which it's being proposed."

That concern is expected to drive Republican opposition in Congress. Florida Sen. Marco Rubio, who delivered the GOP response to Obama's State of the Union address, said Wednesday that raising the minimum wage is the wrong way to help workers increase wages.

"I don't think a minimum wage works," Rubio said on "CBS This Morning." ''I want people to make more than $9 dollars an hour. The problem is you can't mandate that."

Boehner, the House speaker, told reporters Wednesday: "When you raise the price of employment, guess what happens? You get less of it."

The Obama administration points to companies such as Costco, Wal-Mart and Stride Rite that have supported past minimum wage increases. The White House says higher wages help build a strong workforce and lower turnover, improving profitability over the long run.

AP Economics Writer Christopher Rugaber contributed to this report.

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