The executive director of a liberal activist group says a new report form the Center for American Progress Action Fund shows an increase in the minimum wage would have a positive impact on the state’s economy. Matt Sinovic of Progress Iowa says the extra money those workers make would be put right back into the economy. “What economists have found and discovered in their research is that when you put money in the pockets of middle class or low-wage workers, they tend to turn around and spend that. And that spending spurs economic growth,” Sinovic says.

This study is in contrast to what an Iowa State University economics professor, Peter Orazem, has found about the increase the minimum wage. Orazem says so few people make minimum wage that the increase would make much of an economic difference. Sinovic doesn’t agree. “The Economic Policy Institute that we cite in our report shows that 216-thousand Iowans would be directly impacted. And in addition, another close to 90-thousand would be directly impact. So, those would be the people making just above minimum wage,” Sinovic says.

Opponents cite a report from the Congressional Budget Office that says some 500,000 workers nationwide would lose their jobs if the minimum wage is raised to $10.10 an hour. Sinovic says his reading of the CBO report shows the impact is inconclusive. “If you examine the report it says there will be anything from a slight positive gain in jobs, all the way to losing a significant number,” Sinovic says.

Professor Orazem at ISU believes that there won’t be a lot of jobs cut, but he says employers will cut the hours of minimum wage workers, resulting in a net loss of income for them. Sinovic doesn’t agree with that assessment either. He says the spending spurred by the extra money given to minimum wage workers will help businesses. “The conclusion that most economists make is that businesses won’t be cutting back business or hours, because they going to be keeping up with that new demand,” Sinovic says.

The Progress Iowa view is in line with Iowa Senator Tom Harkin, a Democrat who is co-sponsor of the effort to raise the minimum wage at the federal level. Harkin released a statement following the CBO report that says “gradually raising the minimum wage to $10.10  would raise the wages of nearly 28 million low-wage workers, pumping 22 billion dollars in the economy and-contrary to the CBO’s report- would create 85,000 jobs over three years due to increased consumer demand.”

You can read the full Progress Iowa analysis on the minimum wage here.

A bill to increase the state minimum wage cleared a senate subcommittee today.