President Obama's proposed minimum wage hike could cost D.C. jobs

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Local,DC,Eric P. Newcomer

If President Obama successfully increases the federal minimum wage, the District could see its minimum wage jump 21 percent to $10. The city could also see a resulting increase in its unemployment rate, already one of the highest in the nation.

During his State of the Union address Tuesday night, Obama called on Congress to raise the federal minimum wage from $7.25 to $9. By law, the District's minimum wage is fixed at $1 per hour above the federal minimum wage.

Robert Lerman, an economist at the Urban Institute, said Wednesday that a minimum wage hike could hurt most the very group it is designed to help: low-skilled minority workers. Economic data surrounding the effects of increasing the minimum wage acknowledge that at some point, an inflated minimum wage will prompt employers to cut jobs.

"It's a quick fix that people try to make instead of making people more productive," Lerman said.

Though it has been on the decline, the District's unemployment rate of 8.5 percent in December was higher than that of 40 states.

"The business sectors that we predict would be hardest hit are retail and hospitality," said Barbara Lang, president and CEO of the DC Chamber of Commerce.

"We of course strive to avoid doing anything that increases the cost of doing business in D.C. It is hard enough for businesses to succeed and thrive here," Lang said. "But it is also important that local employees are making enough money to be able to sustain themselves in the District."

D.C. Mayor Vincent Gray endorsed the president's proposal, saying he would support the increase.

"It's going to obviously help workers," Gray said.

Ward 2 Councilman Jack Evans said the council's decision to tie the District's minimum wage to the federal minimum wage had been contentious.

"Reopening that whole debate would only be a divisive, difficult debate that has already happened," Evans said. "We should stick to the law we have. Our minimum wage should be a dollar more than the federal minimum wage."

If Obama fails to secure an increase in the minimum wage, the District's minimum wage would remain $8.25, unless the council and the mayor decided to change the law. Although the mayor favors increasing the minimum wage, he wants to hear feedback from community and business leaders before deciding whether to support an increase independent of federal action, according to his spokesman.

Ed Lazere, executive director of the DC Fiscal Policy Institute, believes the District's minimum wage needs to increase regardless of Obama's success at the federal level.

Lazere said, "We know a large share of D.C.'s low-income residents are working but just not earning enough to get out of poverty."

Currently, Washington State has the highest minimum wage at $9.19, so if the District's increased its minimum wage to $10, it could be the highest in the nation.

enewcomer@washingtonexaminer.com

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