Still no clear path for a higher minimum wage

During Tuesday's midterm election rout by the Republicans, Democrats captured a small victory when Alaska, Arkansas, Nebraska and South Dakota became the latest states to raise their minimum wages. Increases also passed in San Francisco and Oakland.

The impact of these votes will vary. Arkansas' and South Dakota's hourly minimum wage will hit $8.50, while Nebraska's will rise to $9 and Alaska's will reach $9.75. Residents in Illinois also gave a thumbs-up to raising their minimum wage in a nonbinding vote. Rates in San Francisco and Oakland will jump t0 $15 and $12.25, respectively.

According to polling data, most voters support increasing the minimum wage from the current federal level of $7.25 per hour, which hasn't changed since 2009. More than two dozen states have raised the wage in recent years as have 18 cities and counties.

"I understand why people support raising the minimum wage," said Michael Strain, a resident scholar at the American Enterprise Institute, who added that it's "appealing politically."

However, Strain and others argue that raising worker pay creates risks, adds to joblessness among teenagers and marginal workers and places an unfair burden on small businesses.

"As minimum wages go up, employment goes down," he said.

Jared Bernstein of the Center for Budget and Policy Priorities (CBPP) disputes that view. He told CBS MoneyWatch that "the evidence doesn't support that claim at all." Other economists agree, arguing that most workers who earn the wage are adults and that a fair number of them have at least some college education.

But Strain advocates bolstering the Earned Income Tax Credit as an alternative because it provides those who qualify for it a direct cash benefit that rises with their income. That would let these workers earn more money without subjecting their employers to higher costs, he said.

A report by the Congressional Budget Office released earlier this year found that raising the minimum wage to $10.10 per hour would benefit 24.5 million people and result in the loss of 500,000 jobs. Bernstein said these displaced workers would get better jobs.

"There is no perfect policy," acknowledged Bernstein, who served as Vice President Biden's chief economic policy advisor.

In today's dollars, the minimum wage is 22 percent lower than its peak in the late 1960s. It isn't adjusted for inflation, which means people who receive it are seeing their spending power erode.

"The much analyzed history of minimum-wage increases shows that they have achieved their goal of boosting the earnings of low-wage workers, most of whom really need the extra resources, with virtually no budgetary costs and few unintended consequences," according to a CBPP report released earlier this year.

Walmart (WMT) and McDonald's (MCD) along with other major employers have come under pressure from a union-backed campaign to raise their workers' minimum wage to $15 per hour, an effort the companies have so far resisted.

"There is considerable room to raise the minimum wage nationally," said Ken Jacobs, chairman of the UC Berkeley Labor Center.

However, given the Republican victory in the midterm election and takeover of both houses of Congress, many experts doubt that a national increase in the minimum wage will be enacted, although additional local initiatives might be more likely.