When the lowest pay rises, what happens?
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A pay raise - and a rent increase
For Rivera, the latest increase comes at a crucial time, just before her monthly rent jumps from $656 to $760.
Few US workers stay in minimum-wage jobs for as long as she has worked at the small assembly plant near her home. "I stay because I don't know much English," she says through an interpreter. "And I can walk there, so I don't have to pay for the bus."
The Puerto Rico native has raised five children, and still has two teenage sons at home. Ever since her husband died eight years ago, she's been living on her own income plus a Social Security check, which she gets as a widow.
Active with an organization called Neighbor to Neighbor, she testified at the Massachusetts State House to push for the pay hike she is now getting. But she knows, also, that her employer, Customatic, can only afford to pay so much. At some point, she worries, her job could disappear or move overseas.
To be sure, not everyone on minimum wage is poor. The low-wage workforce also includes many people - teens or adults - who live in households with other breadwinners.
A broader array of policies would be needed to reduce poverty in the US, economists say. Dr. Sawhill of Brookings says these include a higher earned-income tax credit, child-care assistance for working parents, and programs to encourage marriage and discourage teen pregnancy.
Promoting more work hours is a major piece of the puzzle.
"If the heads of poor households worked as much as the heads of nonpoor households, it would have quite a dramatic effect," probably a 40 percent reduction in poverty, she says.
But a higher minimum wage is also part of her proposed package. To many people, experts and nonexperts alike, the minimum represents a moral imperative.
"We need to have a floor," says Noah Berger of the Massachusetts Budget and Policy Center in Boston. "People who work full time to support a family should be able to do so."
What might a national minimum of $7.25 mean for the economy?
One economist, George Treyz, recently revved up his computer models of the economy in a bid to find out. The firm he heads, Regional Economic Models Inc. in Amherst, Mass., specializes in such forecasts.
His model suggests some of the complex ripple effects - and the possible magnitude of changes. The study predicts that, two years after the minimum of $7.25 goes into effect, total employment in the US would fall by 0.17 percent. That's roughly the loss of one job in every 600.
The pay gain for workers affected by the wage hike might approach 8 percent.
"It's a significant redistribution of income" to several million low-wage workers, Mr. Treyz says. Meanwhile, "there is some very small amount that it costs people in general" throughout the economy.
Wage hike would nudge up prices
The pay raise would push up consumer prices by 0.35 percent. That would make it harder for US companies to sell exports overseas. The upshot: Thanks to inflation and weaker trade performance, the nation's real disposable income would fall slightly, by 0.14 percent.
The impacts of a minimum-wage hike would be much bigger in some states than others, Treyz found. The smallest effects would show up in places like Massachusetts, which already have wage floors higher than $5.15 per hour.
YOUR VIEWS
Does a minimum wage increase help both families and the US economy?
While he has used forecasting techniques, other economists have tried to understand the minimum wage by analyzing the track record of real-life data.
Despite opportunities to compare states with high minimum wages and those at $5.15 an hour, researchers have had a hard time pinning down the precise effects of a wage hike.
In any given state, the course of jobs, incomes, and prices is driven by many forces, and the minimum wage generally has only a bit part to play.
For Waxler's part, he says the health of the overall economy is what's driven him to add or cut jobs in the hotel business over the past 27 years, not changes in the minimum wage.
But the higher the minimum goes, the greater the dampening effect on jobs, says Rebecca Blank of the National Poverty Center in Ann Arbor, Mich.
Still, "it's not nearly as costly as economists used to think," says David Autor, a labor expert at the Massachusetts Institute of Technology in Cambridge.
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