Minimum wage hike may hurt corporate profits - Obama
WASHINGTON - President Barack Obama said on Thursday that raising the minimum wage, as he has proposed, might trim corporate profits, but he added that U.S. firms were enjoying robust earnings and needed customers with money to spend.
"It might have some modest impact on their profits," he said in an on-line video question and answer session sponsored by Google+.
"But the fact of the matter is, if we're going to have a society in which we've got broad-based prosperity, those same businesses also have to worry about do those customers have money in their pockets."
Corporate profits are at record highs, helped by increases in U.S. worker productivity, Obama said. At the same time, wages and income have remained stagnant, he added.
"There are a lot of countries that are competing very well - some of our toughest competitors, countries like Germany for example - who have seen greater wage and income growth," he said.
Laying out his second-term agenda in his State of the Union speech on Tuesday, Obama asked Congress to raise the minimum wage to $9 an hour from the current $7.25. The wage hike would lift many workers out of poverty and at the same time boost consumer spending, a key component of economic growth, Obama and his aides have said.
A woman in the Google+ video session asked how raising the minimum wage would affect her cost of living as companies raised their prices to accommodate the need to pay workers more.
The president replied that companies could likely absorb increases in the minimum wage, which last rose over stages between 2006 and 2009, without being put out of business.
"Nobody's going to be getting rich on $9 an hour ... but it could make the difference between whether they can afford to buy groceries or whether or not they are going to a food bank," Obama said.
"And my suspicion is you'll still be able to get your Starbucks," he said.
Some economists have criticized Obama's proposal, saying it will hurt low-skilled workers by stifling hiring. It also faces a big hurdle in the Republican-controlled House of Representatives. Republicans have often - but not always - opposed increases in the minimum wage.