By Michael Reich | The Herald News
While debates about how to promote jobs and economic growth while tackling the deficit have dominated the political conversation for the past year, an effective strategy for boosting the economy without increasing government spending or adding a dime to the debt has been largely ignored: raising the minimum wage.
Raising wages for the nation’s lowest-paid workers puts money into the hands of people who spend their incomes at the highest rates, boosting demand for goods and services. A home health aide who gets a modest bump in her salary can buy another gallon of milk, a new coat for winter, and get the haircut she’s been putting off for months.
Some will argue that we cannot raise the minimum wage now because it would lead to further job losses. But the best academic research shows otherwise. While the simplistic theoretical model of supply and demand suggests that raising wages reduces the number of jobs employers offer, the reality of how the labor market functions is much more complex.
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