Minimum Wage Hike Proposal Stirs Debate

By Jeff Neumeyer

February 13, 2013 Updated Feb 13, 2013 at 7:08 PM EDT

INDIANA (www.incnow.tv) --- Raising the minimum wage, is it a plan to stimulate economic growth, or a death knell for small businesses?

President Obama announced in his “State of the Union” Address Tuesday that he wants to hike the federal minimum wage by $1.75 an hour by 2015.

In 2011, 108,000 workers in the Hoosier state were paid at or below minimum wage.

If the increase goes through, for folks who are full-time, it would mean at least a raise of $70.00 per week.

But can all employers afford the higher salaries?

Restaurants and retail establishments figure to be hit the hardest by the president's proposal to take the federal minimum wage from $7.25 an hour up to $9.00 an hour, and to then index it to inflation.

Indiana currently requires companies to pay the federal minimum wage.

In Ohio, companies grossing more than $283,000 a year have to pay $7.85 an hour.

University of St. Francis economics professor Doug Meador believes it would help the economy by spurring more consumer spending.

Others feel it's more about ensuring survival.

" A lot of people out here are trying to get good jobs and for $7.00 an hour, that ain't cutting it, the way the economy is. But $9.00 an hour, that's good," said Francis Johnson, who says a wage hike for low-income people is long overdue.

" This raising the minimum wage could actually be good for the economy, because it would put more money in the hands of workers," said Meador.

The idea is, if employees make more, they’ll spend more.

But does it really work that way?

The president of the Fort Wayne Chamber of Commerce believes lots of businesses wouldn't be able to raise prices sufficiently to counter the extra drain from higher labor costs, and they would be in trouble.

The proposal needs approval from Congress before it could become law.

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