In last week’s State of the Union address, President Obama spoke of many things. Not shoes and ships and sealing wax, but immigration reform, proposals to stop gun violence, climate change, and energy policy. The proposal that seemed to get the most press afterwards, however, was his call to raise the minimum wage to $9 (from the current rate of $7.25 an hour) and tie further increases to the cost of living.
Perhaps one reason this got the most press is that it’s so concise. Unlike, for example, immigration reform or steps to halt climate change, raising the minimum wage is simple and straightforward. The details of the proposal are clear. No comprehensive plan is necessary, and there aren’t a lot of moving parts. Of course, that doesn’t mean the proposal is without controversy. The Chamber of Commerce has long opposed increases in the minimum wage, and other business groups have come out against any increases.
What would be the practical effect of the President’s proposal? Currently, 19 states and the District of Columbia require employers to pay a higher minimum wage than the federal rate of $7.25 an hour. As of today, however, only one state — Washington — has a minimum wage of at least $9. As a practical matter, this means wages would go up in virtually every state if the rate were raised all at once. (Except in cities that have their own higher minimum wages. In San Francisco, for example, employers must pay at least $10.55 an hour; where I work, in Berkeley, vendors with the city must pay at least $13.03 an hour with medical benefits, or $15.20 an hour without.)