Raising the minimum wage would boost the U.S. economy
By Ryan A. Dodd
Special to The Star
As the federal stimulus comes to an end, the U.S. economy once again appears to be faltering. In search of an alternative, all eyes are on the Federal Reserve to further reduce interest rates in an attempt to induce American households to borrow and spend more.One half of this equation makes perfect sense. Everyone agrees that what is required is more spending. It doesn’t take a Ph.D. in economics to realize that businesses only hire and pay workers because they expect to be able to sell what those workers produce — and that requires customers.
As it turns out, the single largest group of spenders in the U.S. economy consists of those very same workers who depend on wages and salaries to support themselves and their families. Therefore, getting these workers to spend more is as good a place to start as any to stimulate a weak economy.
But how are they to do so when the vast majority of American households have seen their real (inflation-adjusted) incomes either stagnate or decline for the better part of nearly four decades?
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