Minimum wage hike could have negative effect for some - WSMV News 4

Minimum wage hike could have negative effect for some

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When it comes to improving the economy, some believe bigger paychecks could do more harm than good.

In his State of the Union address Tuesday, President Barack Obama unveiled a plan to boost the economy by increasing the minimum wage from $7.25 to $9 an hour.

That had plenty of people taking sides the next day, and some said it could hurt the very people the president wants to help.

Every day, the prospect of a better job with better pay brings plenty of people to the Tennessee Career Center.

Wednesday, that included Jean Parham, who was recently laid off from a trucking company but is eager to get back to work.

"We all need help now and then, don't we," Parham said.

And for her, the prospect of minimum wage increase sounds like a good idea.

"Great. That's great," Parham said. "It would give people more incentive to want to work harder and get back and find a job."

The president pitched a plan to increase minimum wage to $9 within the next two years. He then plans to link the minimum wage to the inflation rate.

"Let's declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty," Obama said Tuesday.

But not everyone sees the idea as a solution.

Jim Brown, Tennessee Director for the National Federation of Independent Business, considers it a "job killer," especially for young people just trying to land a first job.

"It's very, very difficult for businesses to bring in new employees when they're told what they have to pay those new employees, so they have to make cuts," Brown said.

Peter Demos agrees. He runs a popular restaurant chain in the Midstate and seems to worry an increase could devastate business.

"If we only look at our kitchen employees, not anything else, it can cost us about $340,000 a year before we factor in payroll tax or anything else," Demos said. "It definitely would impact the economy."

Undoubtedly, the president's plan will lead to a political fight in Washington for the sake of the economy everywhere and workers like Parham.

"Prices of things go up, so pay should go up along with it," she said. "I hope it'll put more people back to work."

Opponents also worry about the tax impact. Unemployment and payroll taxes would likely increase if the minimum wage does the same.

The NFIB said Wednesday the 2009 minimum wage increase cost the economy about 600,000 jobs.

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