SCOTT SIMON, HOST:
This is WEEKEND EDITION from NPR News. I’m Scott Simon. In his State of the Union address, President Obama called for Congress to raise the minimum wage to $9 an hour, up from its current rate of 7.25.
PRESIDENT BARACK OBAMA: Today, a full-time worker making the minimum wage earns $14,500 a year. 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.
SIMON: But does raising the minimum wage help families if it discourages hiring? David Leonhardt is with his. He’s the Washington bureau chief of the New York Times. David, thanks for being back with us.
DAVID LEONHARDT: Thanks for having me.
SIMON: What do history and numbers say? Is raising the minimum wage a good way to help low-wage workers?
LEONHARDT: Raising the minimum wage pretty clearly helps low-wage workers. I think sometimes you hear it described as some sort of free lunch and other times you hear it described as an economic calamity, and I don’t think it’s either of those.
SIMON: Why not?
LEONHARDT: Because what happens when companies have to pay higher wages, the evidence suggests, is that although it may have some modest effect on employment, it doesn’t have a big effect on employment. And so what that means is that the companies absorb the higher wages. And they absorb them either through taking a hit to their profit or they raise their prices, which means that essentially it comes out of all of their customers, which is to say the society as a whole. So, you can think of it as moving some income from the middle and the top toward the bottom.