What to Know about Raising the Minimum Wage

Periodic increases to the federal minimum wage put more money in people's pockets and can boost nationwide economic performance. However, there is bound to be fear when people talk of raising the minimum wage. Some people voice concern about the impact of wage increases on small businesses (does a higher wage requirement mean some workers may be fired?), while others don't think a minimum wage increase would be the most helpful thing for hard-working Americans. Here you'll find some of the most common myths and facts about raising the federal minimum wage.

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MYTH: Increasing the minimum wage will cause another economic recession.

The minimum wage has been increased at the federal level 22 times since its inception in 1938. During that time, the economy has gotten stronger over time. Minimum wage increases have never stopped that from happening.

FACT: Raising the federal minimum wage won't help in states that already have higher local minimum wages.

It's true that people who live in states with higher state wages will already be getting paid that higher amount. However, only 23 states and the District of Columbia fall under that category; people living in every other state would benefit from a federal minimum wage increase.

FACT: The minimum wage was supposed to be enough for people to live on.

Actually, the minimum wage was meant to be a wage that hard-working Americans could live on. In the words of President Franklin D. Roosevelt in 1933, "By living wages, I mean more than a bare subsistence level - I mean the wages of a decent living." Today's costs of living are vastly outpacing the minimum wage's ability to keep up, which is why so many minimum wage workers are living in poverty.

MYTH: Increasing the minimum wage results in massive layoffs and hiring freezes.

There's always a certain degree of job loss in the immediate wake of a minimum wage increase. However, numerous studies have shown no notable impacts of minimum wage increases on employment. Minimum wage increases have happened in the past, and significant job loss has never been an issue.

MYTH: Restaurants would have to lay off tipped minimum wage workers if those earners suddenly earned the actual minimum wage.

Tipped restaurant workers are paid notoriously low wages because of the expectation they'll make most of their money in tips. This means restaurant owners barely need to pay anything out of pocket for waiters and waitresses. Elevating these workers to the actual minimum wage would be a sizeable hit to employer overhead costs. However, the city of San Francisco recently required tipped restaurant worker wages to be raised from $2.13 per hour to $10.74 per hour. Since then, the city's restaurant industry has experienced positive growth.

MYTH: Only part-time workers are paid the minimum wage.

Most minimum wage earners work full-time hours; also, minimum-wage income accounted for nearly half of all household income in 2011. Nearly 90 percent of minimum wage earners are adults. Not only is minimum wage common among full-time workers, but minimum-wage work is all some people can get.

MYTH: Small businesses can't afford to pay higher wages.

Surveys have shown that most small business owners are actually in favor of raising the minimum wage. They understand that a minimum wage increase bolsters consumer confidence, resulting in more customers coming through the door. Most businesses can offset much of the cost by small increases in the pricing of their goods and services. For others, a wage increase just means a slightly smaller profit margin. Large employers can pay their workers significantly more without losing profits just by increasing product costs by a few cents.