Russell Simmons: Why we need to raise the minimum wage

Yahoo Finance

Minimum wage in the U.S. is a hot button issue. With fast-food workers striking around the country and President Obama calling upon congress to raise the Federal minimum wage to $10.10 per hour, it’s certainly something we will continue to hear about going into midterm elections.

Business magnate and co-founder of Def Jam Recordings, Russell Simmons, founder of the RushCard (a card that helps those who “feel cut off from the economy because they have been turned away by the big banks”), agrees that something must be done to increase wages. “The gap between the rich and the poor is increasing… there’s a lot more we can do and there’s a lack of appreciation of what it means to trickle up instead of trickle down,” says Simmons. “We find that corporations are now putting their money in banks—they’re not reinvesting,” he points out.

The rich enabling the poor doesn’t work, says Simmons. “Corporations save a lot more of their money than people who are struggling do. There’s a lot more money sitting in the accounts of successful individuals than those who are struggling.” If we want to put money back into the economy, says Simmons, the best way is to raise the minimum wage.

There is evidence to support Simmons’ view. According to Labor Department data, the 13 states that raised the minimum wage this year – either automatically to keep pace with inflation or through legislation - are creating new jobs at a faster rate than other states. But there is conflicting research on raising the minimum wage as well. The Congressional Budget Office estimates that raising the federal minimum wage to $10.10 an hour, as President Obama has proposed, would end up costing the U.S. economy 500,000 jobs.

Simmons believes more money in the pockets of lower-income Americans will benefit all and he is clear in his support for the concept of “trickle up economics,” but he also believes that for the American economy to continue to grow, the U.S. must reform its educational system. “Innovation is [America’s] next thing,” he says. “We have to educate our kids in problem solving; all the information that we’re learning in schools now… all of it is available in our Google eyeglasses, so it’s not about memorizing a bunch of stuff, it’s about problem solving.”

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