As much debate surrounds the effectiveness of image wage hikes and who really benefits. Do these wage controls cost jobs . Well discuss the issue on this addition of inside story. But first this background. They deserve to live a good life in one of the richest cities in the world. Reporter close to 100 people rallied outside washington, d. C. City Council Chamber as Council Members inside voted to raise the citys minimum wage to 11. 50 an hour. Congress failure to act, and congress failure to take care of those left behind not just from the recession, but as the people who make the most have done better and better, weve become a city of haves and have nots, and a country of haves and have nots. Step up and make sure that people have a living wage. Reporter with little Hope Congress will raise the minimum wage t wage. In september california governor jerry brown approved a gradual rise in the states minimum wage to 10 by 2016. Last month the town of seatac in Washington State raised to raise the local minimum wage to 15 an hour. The highest in the country. People finally will make ends meet without having to work two or three jobs with decent pay and decent benefits. This is great for the workers and the community here. Reporter in d. C. City council every member greed the old minimum of 8. 25 an hour was too low. The question was how high to go . To 10 or 11. 50 . For minimum wage worker means weaning her family off food stamps. I did apply for public assistance for my son and i to get food stamps because that have issue, because hes still using formula. Price wise things have just shot up. Gas up. House something up in this area. But our wages arent up. Reporter every morning 29yearold yiya wakes up at 6 00 a. M. To get her son ready for the day before she goes to work. She is a Food Service Work in a Federal Building in washington, d. C. We work down in the basement, around in the back to prepare everything for the restaurant to open which is totally different from the shiny wow piece of the government that theyre seeing. Thats how we feel. Were at the bottom. Were at the apartment where the part where people dont see us. Reporter they live at niyas parents house with her Four Brothers and sisters. To be on a more even Playing Field helps everyone. Helps everyone to buy more, helps the economy. Reporter the d. C. Chamber of commerce is against raising the minimum wage. For every percent of raising the minimum wage lowers employment that percentage. For a business person its a big deal. It may mean laying off a person who cant forward to pay that. Thats not what you want team to people to do. But some Small Business owners welcome the change. There are many cities that have a much higher minimum wage than we do, and tourism has not suffered. Pickerly tourists, theyre not going to care if their burgers are a dollar or more. I dont think its going to matter the huge basket 37 he has adopted d. C. As his home 47 years ago. He said the raise in the minimum wage is not only good for the business but the community. A lot of people will be able to increase their price points by 0. 25 to 0. 50, and i think consumers will do that as well if it means people will have a living wage. Reporter down the road, the National Battle over minimum wage has largely stalled. President obama promised to raise the minimum wage. No one who works full time should have to live in poverty and raise the federal minimum wage to 9 an hour. We should be able to get that done. Reporter Congressional Republicans have generally been against the move. In reaction to obamas pledge House Speaker john boehner said when you raise the price of employment guess what happens, you get less of it. Why would we want to make is harder for small employerers to hire people. Tuesdays vote was an unanimous 130. As for all d. C. Laws it will need to be approved by congress. If that happens, d. C. s minimum wage will gradually become 4 more than the federal level. Niya hopes that extra money in her paycheck will bring a better life to herself and her son. Joining us now, heidi, an economist with the Economic Policy institute where she focuses on the lowwage labor market. And from los angeles, writer and senior fell low at the campaign for americas future, and mark wilson, he served as Deputy Assistant secretary for Employment Standards Administration at the u. S. Department of labor for president george w. Bush. He now heads applied economic strategy. So heidi, we saw niya pots. If that d. C. Minimum wage raise was to go through. Shes looking at an extra 26 per shift. Where does that money come from . That money will comeaside from just coming from the employer . What we know is that what the evidence shows is its not going to come from her coworkers getting laid off. The evidencethis is one of the most researched things in labor economics on what is the impact of minimum wage increases and what the weight of that evidence shows is that were not going to see a big layoff of her coworkers. Her pay is not going to be coming from coworkers who lost their jobs. One of the places that her pa additional pay is going to be coming from is that there is going to be reduced turnover that her employers will have to face. Increased in minimum wage lead to reduced turnover of workers. That saves companies. Because hiring and fire something very expensive. Rea theyll recoop some of that cost from hiring and firing. There is likely to be some shift from corporate profits to minimum wage works when the minimum wage goes up. There is a favorite of ways that employers can recoop the costs of an increased minimum wage. But what we know is that the evidence shows its not going to come from her colleagues being laid off. 130 a week. Back of the envelope calculation, in the case of someone like niya potts. That cant be made up by just increases in stability of employment and people not gettingleaving and having to be retrained. So i am dead serious when i say this isthe effects of minimum wage increases the employment. A part of it because the data is there. Labor economists are excited because you have states raising minimum wage at different times at Different Levels so you can dig in and find out what the effects were. What we know the increases in the minimum wage that we have seen have not caused job loss. Thats the evidence we have. So applyin applying that evideno what d. C. Just did, our best guess is that her increased pay is not going to come at the expense of laid off colleagues. Mark wilson, 8. 25 to 11. 50 is more than 30 . How would you answer that question . Where is that money going to come from . As your opening clip pointed out its not free. Someone will have to pay for it. The Restaurant Owner in d. C. Suggested it would be a 1 more increase in price for hamburgers. Consumers will pay for it. Fewer hours perhaps, employers will be careful about watching employee hours. And if the business is slow theyre likely to let them go an hour or two early. Applesbees announced theyre going to deploy 100,000 ipads and tablets so their customers could order their food and pay their bills. Why are they doing that . They probably wont need as main waiters and waitresses in the future. Its not that people will be laid off. I agree with heidi in that point but there will likely be fewer Job Opportunities in the future. Were pumping our own gas. When i started as a minimum wageworker in 1970s i was pumping gas, and most people now a days pump their own. Thats another example of Job Opportunities lost when minimum wage rises. Job opportunities or jobs that were going the way of the gas pumpers. Both. Applesbees is a good example of an employer using technology to increase productivity. We either workers are working harder for the same output or fewer amount of hours are being worked for the same amount of output. Richard, could you make a case that people paying a quarter or a buck extra because it helps the niya potts of the world . Is absolutely does. I think one of the things that the records show and the studies show is that increased minimum wage, in particularly at times like this when there has been so much wage stagnation, and so much pent up demand will lead to increased consumer confidence, increased Consumer Spending and that in turn translates to additional jobs as more successful economy for everyone. By the way, we can look back in history and see in 1968, for example, the minimum wage in real dollar terms or in fixed dollars terms would be 9. 44 now. And the unemployment is less than half of what it is today. The notion that minimum wage destroys jobs is disproved. And when you think about it, the common sense that says people at the lower end of the income spectrum are going to spend the money that they make, that will create jobs and will be good for everyone. Low wage workers as customers. Thats where i want to come back. Well take a short break with our guests and well be back. This is inside story. This isnt a new channel, this is a watershed moment in media for america. This entire region is utterly devastated. People our here are struggling. The fire jumped the highway we took earlier. Your average viewer wants to actually understand how the Health Care Law is going to help them or hurt them. They know they can get extremist bickering somewhere else. People say that were revolutionary. Our revolution is just going back to doing the best in journalism. This is the place to go watch high quality journalism, period. Welcome back to inside story. Im ray suarez. Were talking about the minimum wage and issues that surround raising it. Again our guests heidi from the Economic Policy institute. Richard with the campaign for americas future. And mark, former deputy assistance Sector Employment standards at the u. S. Department of labor in the bush administration. Mark, is there a balance to be struck here . Are there jobs that are, well, vulnerable in this economy any way . Perhaps helping 90 of lowwage workers while disadvantaging some works out in the macroeconomy even while its hurting in the near term some of those very lowwage workers were trying to help. Yes, there will be workers that will be helped by the increase in minimum wage, that is a certainty. Theyll spend almost likely all of the money they get in that wage increase. How difficult it is to ascertain whether the macroeconomy will be helped substantially or not because there will be so many things swirling around. Potentially increasing interest rates. Things that may happen. Tax increases, spending increases at the federal level. So many possibility it is difficult to disentangle is it really had a hard if millions of people have more money to spend we dont know what the effect will be . Sure were talking about 300 Million People and 15 million would be independentin benefitingfrom the wage increas. So in the context it will b be a small number. We are it will be a shot in the arm to the macroeconomy, but it wont be huge. It would shift 35 billion to minimum wage workers. So the economy is 15 trilliondollar. So it will generate jobs when those people will spend that money. But its not a jobs program. Its a wage program. That increase, that economic activity, those people will spend that money. It will increase the amount for foods and services. Who produces the goods and services . More workers, more workers will be willneed to be hired. And richard, help me out here. Will you be less reluctant to add another worker or two on a shift if your marginal costs per hour have gone up 10 to 25 . Well, you have to put that question in context. First of all most of our low wage jobs are in the retail and service industries. A study was done on impact of raging minimum wage to 12. 25. In the real Retail Industry that would amount to 1 hers of annual sales. 6 of payroll. So were not talking about a dramatic shift, number one. Number two, would you hire them . I think the answer is if you want to stay in business and want to stay competitive, yes, you will. No question about it. Were looking atthe reason why i mentioned the job creation aspect of this earlier not to suggest that it was a transformative jobs program but to merely point out that the net effect would be positive. Identifiy says 75,000. Ive seen 100,000. Its relatively small but the net effect would be positive, not negative. You would be lifting threequarters of a Million People off the assistance roles for government assistance. Youll be providing all sorts of Additional Services to these people and you would be doing what is fair and just. I think thats what we need to concentrate on here. Earlier in the program mark referred to the minimum wage as a blunt instrument. There are places in los angeles, where im sitting in washington, d. C. That persistent demand is high enough that you wont see any difference in the clientele or bills in the restaurant. But go a couple of miles away where demand might be slack more, episodic, and suddenly jobs may be in trouble the way they werent, or pushed to the margins to match their hourly productivity with their wage so much closely, and less of a clearcut slam dunk for an interand worker, no . No, you have to look first of all again who these minimum wage workers are. 66 , twothirds of low wage workers work for companies with 100 employees orego or more. Were not talking about mom and pop operations by and large in those kinds of neighborhood. Were talking about the taco bells, mcdonalds, walmart with 1. 4 million employees. Were talking about companies that can make that calculation and make that adjustment. Many of whom have seen record profits even since 2008, and theyre in an excellent position to make these adjustments. There would be very little kind of a problem that you describe, and the advantage, the economic benefits of that are likely to accrue most to the kinds of neighborhoods you just described. More with our guests in a moment. Stay with us. Youre watching inside story the stream is uniquely interactive television. In fact, we depend on you, your ideas, your concerns. All these folks are making a whole lot of money. You are one of the voices of this show. I think youve offended everyone with that kathy. Hold on, theres some room to offend people, im here. We have a right to know whats in our food and monsanto do not have the right to hide it from us. So join the conversation and make it your own. Watch the stream. And join the conversation online ajamstream. From our headquarters in new york, here vo Al Jazeera America we understand that every news story begins and ends with people. The efforts are focused on rescuing stranded residents. vo we pursue that story beyond the headline, past the spokesperson, to the streets. Thousands of riot Police Deployed across the capitol. vo we put all of our Global Resources behind every story. It is a scene of utter devastation. vo and follow it no matter where it leads, all the way to you. Al jazeera america. Take a new look at news. Im ray suarez. This is inside story. Were talking about the minimum wage and mark, im wondering with so many low wage workers working for very Successful Companies weve seen that many of their intake procedures involve advising their own workers on how to take advantage of federal and state benefits for lowwage people. As a taxpayer and a customer, am i better off paying my tax money to give those people benefits like snap, or am i better off paying a little extra so theyre not poor any more. Youre probably better off paying a little extra so theyre not poor any more. If you look at the dead weight loss as economists look at it with the transfer of your money through the federal government and then back through the social Service Programs that a lot of minimum wage workers are available for, there is loss added to that through the transaction. Youre probably better off paying a little bit more. But again thats the cost. The minimum wage, increase in minimum wage is a political argument. Its never been an economic argument. People should be aware that there is a cost associated with it and if people are willing to pay that cost as people in seatac were willing and youll see an increase. Seatac was an unusual market because all of the employees involved in that minimum wage increase work at an airport. Its not like ill go buy my lunch somewhere else, youre stuck there. But will we have better laboratories to sob the effect of the better minimum wage. Meaning . If well see the effect the raise in minimum wage will have and gauge it soon . Yes, we look at it in terms of the aftermath. What is happening to employment, hours, price increases. When these cities, states, counties and the federal government, when they make thee moves people are looking to see what the affect affects are. Thats the thing to fall back on. We have so much information on what the affects have been. Been. I dont have any reason to believe that the effects that that were seeing now will be antidifferent. It has increased wages but not job loss. Lets talk about those workers who make more than minimum wage. So much of this focuses on people at the very minimum. If youre already making 10 an hour. If they raise it to 10, are you going in to the boss to ask for a raise so that youre no longer a minimum wage worker . Is there going to be a bump up for people who are close to the minimum wage . Well, common sense would say that there would be because at that point youve got a worker with some seniority making an entry level wage. While that may not change overnight presumably the worker who has six months or a year on the job who is making 10 or 9. 50 will be expected and will be expecting to make more than that. So yes, there is absolutely, and i think heidi can confirm this but the studies are pretty clear there is a benefit not only for workers at or below the minimum wage but those near and above it as well. I think you start to see a lot of households benefiting from that in addition to those directly effected by the minimum w