Business for Shared Prosperity

Media Matters, July 27, 2009

SUMMARY: Reporting on the minimum wage increase, NBC's Amy Robach stated, "Some small business owners criticized the timing of the increase, saying it's a burden in a weak economy." But Robach ignored evidence that the increase will stimulate the economy.

During the July 24 edition of NBC's Nightly News, national correspondent Amy Robach noted that "[t]he federal minimum wage went up today," and stated, "Some small business owners criticized the timing of the increase, saying it's a burden in a weak economy." But Robach ignored evidence that the increase will stimulate the economy. In fact, the Economic Policy Institute (EPI) estimates that a minimum wage increase will add $5.5 billion in consumer spending over the next 12 months.

In addition, the business organization, Business for a Fair Minimum Wage, has stated, "We expect an increased minimum wage to provide a boost to local economies. Businesses and communities will benefit as low-wage workers spend their much-needed pay raises at businesses in the neighborhoods where they live and work."

In contrast to Robach's report, a July 24 Washington Post article reported EPI's stimulus estimates:

The law, which affects about 4.5 million workers among a labor force of 129 million, has prompted a debate over whether the mandate to boost wages will hurt or help the economy. Some labor analysts say it could put more financial strain on small businesses, forcing some to cut jobs. "The timing of this is not great in the middle of a recession," said John A. Challenger, chief executive of Challenger, Gray & Christmas, a Chicago-based outplacement firm. "Is it better to create more jobs at the lower rate or fewer jobs at the higher rate?"

Others, though, say the raise is badly needed to help low-wage earners, the majority of whom are adults, keep up with rising food, housing and fuel costs. They regard it as a stimulus that could help reduce the growing savings rate and increase consumer spending, which represents two-thirds of the gross domestic product.

The increase "could not have come at a better time," said Heidi Shierholz, an economist at the Economic Policy Institute. But even with it, she said, minimum-wage workers will be paid only $14,500 a year, well below the federal poverty line of $17,346 for a family consisting of an adult and two children.

"This will put $5.5 billion of spending into the economy," she added. "That's not going to solve our problems," but it is "a shot in the arm."

Likewise, during the July 24 edition of CNN Newsroom, host Kyra Phillips reported that "some economists think that struggling businesses might have to cut jobs to keep up, but others think that workers will spend the extra dollars stimulating the economy."

From the July 24 edition of NBC's Nightly News with Brian Williams:

ROBACH: The federal minimum wage went up today, the final step in a three-phase increase that started in 2007. It's a 70-cent-per-hour jump from 6.55 an hour to 7.25. Some small business owners criticized the timing of the increase, saying it's a burden in a weak economy.

From the 1 p.m. ET hour of the July 24 edition of CNN Newsroom:

PHILLIPS: Will more money in people's paychecks translate into fewer jobs? It's an age-old argument, and it's being revived today as the federal minimum wage goes up to 7.25 an hour -- or, an hour, rather, from 6.55. That means that around 4.5 million workers will see bigger paychecks. And some economists think that struggling businesses might have to cut jobs to keep up, but others think that workers will spend the extra dollars stimulating the economy.
— J.H.
Copyright © 2009 Media Matters for America.

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