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Democrats see benefits from Obama's long-shot minimum wage push

U.S. President Barack Obama smiles as he plays on the 18th hole during a round of golf at Mid Pacific Country Club in Kailua, Hawaii Decembe
U.S. President Barack Obama smiles as he plays on the 18th hole during a round of golf at Mid Pacific Country Club in Kailua, Hawaii Decembe

By Mark Felsenthal

WASHINGTON (Reuters) - President Barack Obama's push to raise the minimum wage will almost certainly fail due to stiff Republican opposition, but analysts and Democratic strategists say the issue could help Democratic Congressional candidates in the 2014 midterm elections.

Focusing on an apparently quixotic effort to raise the minimum wage in 2014 allows the president to show support for working people and could help Democratic candidates change the subject from the disastrous rollout of the Affordable Care Act.

And a Republican rejection of the proposal to boost the federal minimum wage from $7.25 per hour to $10.10 would help Democrats portray them as unconcerned with the plight of working Americans and siding with the wealthy.

"It has an appeal with a broad segment of the public," said Carroll Doherty of the Pew Research Center. "And it draws very strong support within his own partisan base. This is something that his party cares deeply about."

The issue may also help unite liberals in the Democratic party base with more centrist party members.

"On any number of issues, the Democratic base thinks he's moved too far to the center and the center thinks he's moved too far to the left," said Dan Schnur at the University of Southern California. "The minimum wage is one of those rare issues where he gets support from both."

Polls show strong support for raising the minimum wage, something administration officials cite in justifying the current push. A Washington Post-ABC news poll released last Wednesday showed support for raising the minimum wage from $7.25 has support among 85 percent of Democrats and 50 percent of Republicans.

"It tends to be a very popular issue with the public, it tends to be a very popular issue with independents," White House Council of Economic Advisers Chair Jason Furman told a think tank group last week.

SERVICE INDUSTRY JOBS

Obama called for raising the minimum wage to $9 in his 2013 State of the Union speech in February and has since backed a rise to $10.10 an hour. He revived the issue in speeches on his vision for strengthening the middle class in July and earlier this month, saying that raising the minimum could help combat increasing income inequality.

Government data show about 3.6 million hourly workers at or below the federal minimum in 2012. They make up about 4.7 percent of the nation's hourly-paid workers, a share that has been declining.

Minimum wage workers work predominantly in service jobs such as food preparation, sales and nurses' aides. The companies employing the most minimum wage workers are Wal-Mart; Yum! Brands, which owns Taco Bell and Pizza Hut; and McDonald's.

The U.S. minimum wage, last increased in 2009, stands well below its inflation-adjusted high of about $10.50 an hour in 1968. Some 20 states and the District of Columbia have set minimum wages higher than the federal minimum, with the state of Washington at the top with a $9.19 minimum, according to the U.S. Department of Labor.

HIGHER WAGE, FEWER JOBS?

White House aides say raising the minimum wage is a key element for the president's 2014 agenda aimed at improving the fortunes of the middle class, and a senior administration official told Reuters that a series of one-day strikes by food workers in 100 cities across the country seeking a $15 an hour wage has helped bring the issue to the forefront.

The restaurant industry called the $15 demand unrealistic, and industry officials said it could lead to fast-food price rises of 25 percent to 50 percent.

Republicans, conservatives and segments of the business community oppose raising the minimum wage. Opponents such as the National Federation of Independent Business say small businesses would suffer, low-skilled workers would lose job opportunities and consumers would face higher prices.

The House voted 233-184 in March to defeat a bid by Democrats to raise the minimum wage. All 227 Republican members voted against it.

Academic economists differ on the impact of increasing the minimum wage. Many economists say higher labor costs would result in fewer jobs. But many studies, including one co-written by former Obama White House Council of Economic Advisers Chair Alan Krueger, have shown a modest increase in the minimum wage does not affect employment levels much, if at all.

That is because employers can take a number of steps to absorb higher labor costs, such as squeezing more productivity out of their workers, cutting wages for higher-paid employees, or raising prices.

The White House has been promoting legislation proposed by Senator Tom Harkin and Representative George Miller, which includes a sweetener allowing small businesses to deduct up to $500,000 annually in spending on equipment or expansion.

"The last time we raised the minimum wage it was signed into law by President (George W.) Bush," said Furman. "....There's no reason why we shouldn't be able to do something like that."

(Reporting By Mark Felsenthal and Fred Barbash; Editing by David Gregorio)

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