Texas A&M Economics Professor Says Raising Minimum Wage Would Reduce Job Creation

President Obama is proposing to raise the minimum wage to $9 an hour to boost the economy.

But reaction has been mixed.

Democrats say it would lift millions of Americans out of poverty, while Republicans say it would hurt employers.

An Economics Professor at Texas A&M says he's done his homework and says a minimum wage hike would hurt future job growth.

News 3 takes a closer look at the research.

Local businesses are keeping a close eye on Congress and a proposal to raise the minimum wage from $7.25 to $9 an hour.

Michelle Winder and her husband own Briarcrest Cleaners in Bryan and have been in business 18 years.

She says raising wages would hurt their ability to do business.

"We would have a few choices here. Possibly decreasing our workforce, raising our prices to meet a certain margin. Possibly having to do both. But I also believe too that that's going to happen in a lot of places," said Winder.

Jonathan Meer is an Assistant Professor of Economics at Texas A&M and has extensively studied the effects of raising the minimum wage along with one of his graduate students.

"What we found is that when the minimum wage goes up all else equal, job creation goes down. Job destruction doesn't increase, the total level of employment doesn't fall, but job creation slows down. Turnover doesn't change and entry and exit of establishment doesn't change either," said Jonathan Meer, Ph.D.

Based on data from IRS filings and business dynamic statistics, Meer says raising the minimum wage to help the poorest of the poor isn't the best method.

"The research shows that the benefits are much larger to working poor families from the earned income tax credit than the minimum wage," he said.

Jeannie McGuire is the President of Project Unity, which provides help to more than 1,300 families a year. She believes raising the minimum wage could help some of the people she serves, but worries too.

"The bottom line is definitely will the family have more to take home? You know will it put them in a different income bracket that would then take more out of their pay so they have less take home? We have a very high poverty rate in our community around 26 percent," said McGuire.

"Let's declare that in the wealthiest nation on earth, no one that works full-time should have to live in poverty," said President Barack Obama during the State of the Union Address.

A debate still being discussed and analyzed.

Five states have no set minimum wage.

The states of Georgia and Wyoming have the lowest set minimum wage at $5.15, while the State of Washington has the highest minimum wage at $9.19 an hour.

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