Does raising the federal minimum wage increase workers' purchasing power?
By Jacob Alabab-Moser
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YES
Raising the federal minimum wage to $15 an hour by 2024 would generate "increased purchasing power for consumption" and a "substantial economic stimulus," especially in the lowest-wage states, Michael Reich, a University of California, Berkeley economist, testified to Congress last year. The effects of this raise would be concentrated in the restaurant and retail industries, as well as in farming, janitorial services, security services, elder care and child care.
Purchasing power has eroded for minimum wage-earners over time, as the federal minimum wage has been fixed at $7.25 since 2009. Based on the Consumer Price Index, its purchasing power in 2017 was 30% lower than in 1968, according to the Aspen Institute.
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