Proposed changes in the minimum wage would spur medium-term fiscal growth and "would be helpful from a macroeconomic point of view," according to Christine Lagarde, managing director of the IMF. However, the IMF did not give an exact rate for the federal minimum wage, deferring to Congress to set the agenda.
This is the first time the IMF has recommended that the U.S. raise the minimum wage, noting that the current federal minimum wage is low both historically and internationally.
The Congressional Budget Office studied the impact of a federal plan to increase wages to $10.10 and estimated that 24 million workers would be better off at a cost of 500,000 jobs.
The current federal minimum wage amounts to $7.25 per hour, but 22 other states have higher minimum wages, and both Seattle and Massachusetts have recently made headlines by debating increases. In a sweeping 35-4 vote last week, the Massachusetts Senate agreed to raise the state's minimum wage from $8 to $11 by 2017, the Boston Globe reports.
The legislation is expected to pass through the House with little opposition. The increases would occur by $1 each Jan. 1 for three years, until the limit was reached. (RELATED: Seattle Approves $15 Per Hour Minimum Wage)
In the Massachusetts case, the liberal Economic Policy Institute has determined that the legislation will provide additional support to 600,000 low-wage workers, who have seen their wages stagnate since the late 1970s.
But David Neumark, an economist at the University of California-Irvine, is much more skeptical about the results of minimum wage increases. "It doesn't give to the poorest, and it doesn't take from the richest," he said. Instead, small business owners take the greatest hit.
"It's really no compromise whatsoever from the perspective of small businesses here in Massachusetts," Jon Hurst, president of the Retailers Association of Massachusetts, added. "It's a 38 percent increase in the minimum wage, far above any other state." (RELATED: Take Back The High Ground In The Minimum Wage Debate)Facebook, Google Plus, & Twitter. You can also get Freedom Outpost delivered to your Amazon Kindle device here.