$9 minimum wage: Poverty reducer or job killer?

President Obama wants a raise for low-wage workers, saying it would lift millions out of poverty. Conservatives aren't sold

Minimum-wage-earning migrant workers load boxes at a Colorado farm in 2010.
(Image credit: John Moore/Getty Images)

In perhaps the "most controversial proposal" in Tuesday night's State of the Union address, President Obama called for raising the federal minimum wage from $7.25 to $9 an hour. "Even with the tax relief we've put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong," Obama said. "Let's declare that in the wealthiest nation on earth, no one who works full time should have to live in poverty." The White House says that raising the minimum wage would improve the lives of millions of people, from cooks to store clerks to health-care aides — while placing only limited burdens on employers.

Worker advocates argue that hiking the minimum wage would boost the economy by putting more money into the pockets of lower-income Americans likely to spend it right away. A 2011 Federal Reserve Bank of Chicago study found that minimum-wage workers increase spending by $2,800 a year for every $1 increase in the minimum wage. That helps everyone, Christine L. Owens, executive director of the National Employment Law Project, tells CNN. "One of the best ways to get the economy going again is to put money in the pockets of people who work, who will spend it at small businesses in their communities," Owens says. "A minimum wage increase will stimulate consumer demand and help drive economic growth for the people who most need it in America — workers."

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