ALEX CHADWICK, host:
From NPR News, it's DAY TO DAY.
The federal minimum wage goes up 70 cents an hour tomorrow to $5.85. This is the first of three increases over the next couple of years. So by July, two years from now, the minimum wage is supposed to be $7.25 an hour. So tomorrow is the first hike in the federal minimum wage in 10 years. But some places are not waiting for the federal government.
Joining us is MARKETPLACE's John Dimsdale. John, what have the states been doing? Tell us.
JOHN DIMSDALE: Well, more than 30 states already have minimum wages that are higher than tomorrow's increase. Some even have a wage law higher than the $7.25 that the Feds won't hit until 2009. And supporters of higher minimum wages have all sorts of studies that show higher wages do not raise unemployment, they don't raise prices in the states that have them. But there are skeptics, like Jill Jenkins of the Employment Policies Institute. She says these studies look only at employment rates immediately before and immediately after the changes in the minimum wage.
Ms. JILL Jenkins (Chief Economist, Employment Policies Institute): You know, employers don't necessarily lay people off immediately. It takes employers a little while to figure out how they're going to cope with it. Can they raise prices a little? Should they cut hours? Sometimes they may not actually fire anybody, but as soon as somebody quits, they just don't replace them.
DIMSDALE: So Jenkins has her own study, which shows that there's a two percent drop in jobs for every 10 percent jump in the minimum wage.
CHADWICK: John, the classic criticism of raising the minimum wage is jobs will go elsewhere. Any data to support that?
DIMSDALE: You know, there's no real evidence of that. Although, that may be more because, you know, we're in a tight job market right now. Many employers say they already have to pay more than the federal minimum wage just to keep their workers. And that's - so that means there might not be much impact from raising the nationwide floor. But minimum wage supporters, like Lawrence Mishel of the Economic Policy Institute says, there is a ripple effect.
Dr. LAWRENCE MISHEL (President, Economic Policy Institute): When the minimum wage goes up, those people who earn slightly more within a dollar, let's say, of the new minimum wage, tend to see a bump up in wages. Minimum wage increase affects those who directly receive it, as well as the spillover from those who make a bit more.
CHADWICK: Well, John, with so many states already having higher minimum wages, how many people do you think will be affected by this nationwide federal increase tomorrow?
DIMSDALE: Well, the Department of Labor says there are 1.7 million Americans who earned the minimum wage last year. But the supporters of minimum wages say ultimately, this two-year increase, along with the spillover effects, will raise salaries for 13 million workers. And this has become a campaign issue, with some of the Democratic presidential candidates urging even higher increases in minimum wages down the road.
CHADWICK: Thank you, John. John Dimsdale of Public Radio's daily business show MARKETPLACE, produced by American Public Media.
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