I finally have some time to respond. Sorry for the delay.
Ignoring the question of if there SHOULD be a minimum wage in the first place- what would the proposed increase in the Federal Minimum Wage really mean?
First- who would it benefit? According to the Bureau of Labor Statistics, 1.6 million are currently paid the Federal Minimum Wage. Many states have higher minimums and it was pointed out that there are people who fall between the current minimum and the proposed new one. That is certainly true. However, the majority of those currently make between $9 and $10 an hour which means they would be required to receive a wage increase of less than $1 an hour.
I saw a couple of studies which suggested that one quarter of all private sector workers earn $10 an hour or less.
http://thinkprogress.org/economy/20...ate-sector-workers-earn-less-than-10-an-hour/ There is a significant portion of that which is not subject to minimum wage laws (those in service industries which receive tips the main example). An increase in the Federal Minimum would not apply to them since they are already exempt. (BLS figures indicate that 3.6 million workers got minimum wage or less and 1.6 were paid the minimum which leaves 2 million or more than half - 55% are exempt ) If the same portion are exempt, that would make about 14% of private sector workers elgible for a raise.
http://www.bls.gov/cps/minwage2012.htm
In 2012, 75.3 million workers in the United States age 16 and over were paid at hourly rates, representing 59.0 percent of all wage and salary workers. 1 Among those paid by the hour, 1.6 million earned exactly the prevailing federal minimum wage of $7.25 per hour. About 2.0 million had wages below the federal minimum.2 Together, these 3.6 million workers with wages at or below the federal minimum made up 4.7 percent of all hourly paid workers.
Then we must note that the 26% figures was of all "private sector" employees. It does not include government sector employees. Adding in government employees would lower that percentage so maybe ten percent getting an increase- with most of them only getting less than $1 an hour increase (because they fall between $9 and $10 already).
Moving past this, what effect would raising the minimum wage really have? If you were a part time worker, 32 hours a week and get a $2 raise, your income will go up by $64 a week- $3200 a year. Not a lot but when you are trying to live on that amount, it can make a big difference. (keep in mind that 1.6 million would get the full $2- others would be getting less). If you are in the $1 increase category, you get about $30 a week more.
Would that mean fewer jobs? Depends. How does an employer respond to the higher wages some of his employees would get? He has three options. He can take a lower profit. He can raise his prices to cover his higher expenses. Or he can reduce his workforce. Or divide it up among all three in some way. Obviously taking option #2 would mean fewer jobs. But the increased wages might also mean MORE jobs. How? People spending the increase in incomes creating more demand for goods and services and in turn the need for more workers. Which would be the bigger effect- more spending creating more jobs or employers reducing labor and lowering the number of jobs? Hard to say. Likely would be close.
Does the government get anything out of it? Again- depends. Higher incomes could mean people moving into higher tax brackets- but that isn't going to happen here. The people at the minimum wage generally don't owe any Federal Taxes- about half of those who filed income taxes last year ended up owing nothing. Social Security receipts would rise slightlly- that is a percent of income. Slightly- not really anything significant.
It could also in theory mean lower government expenses- on welfare programs- if the additional income meant reduced benefits for some.
I would at this point like to add that all of these effects are tiny on the overall economy. The net gains and losses would be small. And temporary. Employers and workers both would adjust their spending to the newer income changes. Within two years, the impact is zero. Most likely effect? A slight increase in prices to offset the higher wages. Again- all of these effects would be extremely small on our $14 trillion economy. The real purpose isn't economic- it is political. Democrats trying to say they care about the poor and the "rich Republicans" don't. There is an election coming up (as there always is).
Historically, changes in the minimum wage have had little effect on the economy- either in terms of unemployment or in terms of prices. There are other factors which have much larger impacts on both. It tries to make people "feel good" and that is about it.
