Is a Minimum Wage Hike Coming?

Is a Minimum Wage Hike Coming?

The minimum wage has become a rallying point among those who believe that economic inequality is a worsening problem in the U.S., with the White House calling on Congress earlier this year to raise the federal minimum wage to $9 an hour by 2015, with automatic adjustments upward to reflect increasing costs of living going forward. A recent Gallup poll found that 76% of Americans would propose a raise in the minimum wage to $9, while nearly as many would support inflation adjustments to make future increases automatic.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at the minimum wage question and its impact on investors, businesses, and workers. Although a minimum wage hike obviously boosts income for those workers who receive it, Dan notes that the potential for job eliminations at the margin could cause some employees to lose work entirely. Dan also focuses on the fact that, despite widespread attention to major corporations McDonald's , Wal-Mart , and Yum! Brands , some jobs at those companies already pay above-minimum wages, and the companies have the financial capacity to pay higher labor costs. Rather, small businesses could be the most hurt, as they often have the least flexibility to pay incrementally more for workers.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends McDonald's. The Motley Fool owns shares of McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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