Raising the federal minimum wage benefits many Americans.  How much will it do so?  Because an increase in the federal minimum wage is controversial, proponents and opponents alike sometimes exaggerate its impact.  The reality is, as even economists who support an increase warn us, that a higher minimum wage is no cure-all for poverty.  With that said, however, studies suggest that the three-step increase to $7.25 per hour will help in the following ways:

• It will be good for poor families.  The federal minimum wage increases  help millions of people who work not only at the minimum wage but below it and just above it as well.  While an increase of a few thousand dollars per year will rarely by itself lift a person or a family out of poverty, it does ease the struggle to pay for groceries or child care or rent, and it adds meaning and dignity to one's labor.  A reasonable minimum wage is an indispensable step towards the goal of reducing poverty, along with other steps that include credits on taxes, better education, and health coverage.  A fair minimum wage is not enough, but it is essential.
• It will be good for communities.  Low-wage workers will spend more in local businesses and will rely less on local social service agencies for assistance.  The change help build the local tax base and reduce the spending of local taxes on social assistance programs.
• It will be good for businesses. Minimum wage increases in the states have resulted in reduced absenteeism, less turnover, and better morale from employees, as well as lower recruiting and training costs for employers, all of these contributing to higher productivity. 
• It will be good for minority working women. More women than men fill the lowest-wage jobs in retail, health care, and restaurants and hotels, and a third of them are African-American and Hispanic.
• It will be good for the tax payer. Unlike federal assistance programs, the federal minimum wage helps the working poor without adding to the federal tax bill.
• It will be good for our nation.  An increased federal minimum wage will help reduce the growing gap in incomes between the poor and the wealthy in America.  When such a gap becomes as wide as it is, our democratic values are threatened, for the freedoms to vote, speak out on public issues, and enjoy a stable and open society are not meaningful for those who are worn out by struggles for the basics of life.
• Its disadvantages have been exaggerated. The most commonly heard objection to federal minimum wage increases continues to be that small business owners, facing an increase in labor costs, will need to reduce employment and might be forced to close their doors.  But a growing number of studies show that this scenario overlooks the flexibilitiy of employees and employers when the minimum wage changes.  Studies note that states that increased their minimum wages also have stronger job growth compared to states that kept the static $5.15 federal minimum . And the risk of business failure does not increase when the minimum wage does. 

                                                --Brock Haussamen; revised August 2007