After ten years of wrangling in the Congress, the American workers surviving on minimum wages are going to get a raise. Democrats who promised to boost the minimum wage when they won control of Congress in elections in 2006 have delivered on that promise.
The US Congress has voted in favour of the rise, which was attached to a bill funding the Iraq war. The White House approves of the increase which will be phased in over a two-year period and will accompanied by tax breaks for small businesses to help employers pay the increase in wages.
The minimum wage in the US is to rise by $2.10 per hour, to $7.25 from its current level of $5.15.
Debates over raising the minimum wage usually pitch the proponents of the free market against those who want to lift up the poor.
In a free market economy, prices allocate land, information, capital goods, and labor to their highest use. Markets are truly free only if prices are free.
Wages are good indicators that direct people to employment and show businesses how to expand. Freely floating prices allocate resources efficiently to places where they will take root and boost economic productivity.
Currently, a person working 40 hours per week at the current minimum wage of $5.15 makes about $10,700 a year. An increase to $7.25 would boost that to just over $15,000 a year.