Minimum wage hike would likely boost consumer spending

Though debate continues on the merits of increasing the U.S. minimum wage, there is little room to argue that more money for those earning the wages would boost consumer spending, Bloomberg reports.

While the magnitude of the impact an increase would have is a point of contention, a pay hike of $1.75 per hour, which is less than what is currently being proposed, would augment purchases by at least $48 billion in the first year, according to an economist with the Federal Reserve Bank of Chicago.

The Obama administration is proposing to set the minimum wage at $10.10 per hour. According to the Congressional Budget Office, 16.5 million Americans currently earn less per hour than the suggested threshold.

The expected economic boost is based on economist projections that lower-wage earners would spend all of their extra wages. Household spending in the U.S. represents nearly 70 percent of the economy.

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