Fact Checking Michele Bachmann on Minimum Wage
Economists disagree on effect of $7.25 hourly rate.
June 29, 2011 -- Michele Bachmann has been an official presidential candidate for less than 48 hours and she's already feeling the media heat.
In an interview with ABC's George Stephanopoulos on Tuesday, the Minnesota congresswoman did not back away from her previous stance to eliminate minimum wage in order to "virtually wipe out unemployment."
"I think we need to look at all regulations, whatever--whatever ones are inhibiting job growth," she said.
When asked if the minimum wage is one of those issues, Bachmann again just responded, "All regulations."
But with unemployment currently at 9.1 percent, could Bachmann's proposal to scrap the minimum wage really help?
The jury is still out among economists.
"[She] is completely wrong," said Heidi Shierholz, a labor market economist at the left-leaning Economic Policy Institute. "If you decrease the minimum wage, you would not increase employment. The economic literature is really clear on that point."
But James Sherk, a senior labor and economics policy analyst at the conservative-leaning Heritage Foundation, said Bachmann got it half right. He gave her a five out of ten on the truthfulness scale.
"You're not going to wipe out unemployment completely, but there is an element of truth to it," Sherk said. While large numbers of people do not lose jobs because of hikes in the minimum wage, employers put off hiring people, he said, which delays the age that young people, in particular, enter the workforce.
"If it means that you don't get that first start in the labor market, then you could be on the trajectory for lower wages for your entire career," Sherk said. "Looking at the long term there are pretty severe costs."
There are about 4.4 million Americans earning the current minimum wage of $7.25 per hour or less, which is about 3.4 percent of the workforce. That's almost as many as two years ago, when the minimum wage was only $5.85 per hour.
More than half the people at this lowest end of the labor market are women over age 25, and a quarter of them never completed high school.
"The key is it's not a middle class teenage afterschool job story. It's a story of workers whose family depends on the earnings they get at their job," Shierholz said.
By Sherk's calculations, for every 10 percent raise in the minimum wage about 2 percent of the people currently earning minimum wage would get laid off. He argued that when wages are forced up, companies have to decide if the productivity of their employee is worth the higher paycheck.
"You can't legislate productivity," he said. "Employers are not going to pay workers more than the value they add to the company."
But Shierholz argued that raising the minimum wage would add jobs to the overall economy because it shifts money from a sector that hoards cash (corporate profits) to a sector that spends it (low-wage workers).
She said that increases would not add minimum wage jobs, but that the added buying power of low-wage workers would stimulate the creation of about 50,000 non-minimum wage jobs for every dollar per hour wage increase.
"So you get a boost to the economy," she said. "That's stimulus."
Compared to the 11 million jobs needed to fill the current employment gap, Shierholz said it was just a drop in the bucket.
"It's not a huge impact," she said. "It's not going to solve everything… but it's not in the 'con' column either. We are not going to lose jobs by increasing the minimum wage."
While economists are still conflicted about the overall effects of raising the minimum wage, the general population tends to overwhelmingly support it.
Just over two thirds of Americans polled favored or strongly favored increasing the minimum wage to $10 per hour in a poll conducted by the Public Religion Research Institute in September 2010.
"It's enormously popular," Shierholz said. "It cuts across Republicans and Democrats because rewarding work is sort of a key value."
ABC News Live
24/7 coverage of breaking news and live events