Since the financial crisis of 2008, the issue of income inequality has leapt to the forefront of American politics. Not only have millions of people lost their jobs, but the crisis revealed a longer term structural issue in the economy: the share of America’s wealth that poor and middle class workers are taking home has stagnated since the 1960s, while the incomes of wealthiest have skyrocketed.

The federal government has taken dramatic action, from the 2009 stimulus plan to the Federal Reserve’s unprecedented “quantitative easing,” to set the country on the path to sustained recovery. But the American economy is far from healthy: growth remains slow while unemployment remains high. According to the National Poverty Center, poverty rates have risen to 15.1 percent, the highest rate since 1993. Meanwhile, the country is witnessing the highest concentration of wealth since 1928.

Thus, political leaders in the US are searching for policy responses that can serve a dual purpose: reduce poverty and inequality, and also return the country to robust growth. Indeed, these two areas are closely related – a growing economy would create more jobs and opportunity, and by the same token, more people with higher incomes would increase consumption, putting more money back into the economy and boosting growth further in turn.

In this context, one such idea that has come to the forefront has been the proposal to raise the Federal minimum wage.

Since the financial crisis of 2008, the issue of income inequality has leapt to the forefront of American politics. Not only have millions of people lost their jobs, but the crisis revealed a longer term structural issue in the economy: the share of America’s wealth that poor and middle class workers are taking home has stagnated since the 1960s, while the incomes of wealthiest have skyrocketed.

The federal government has taken dramatic action, from the 2009 stimulus plan to the Federal Reserve’s unprecedented “quantitative easing,” to set the country on the path to sustained recovery. But the American economy is far from healthy: growth remains slow while unemployment remains high. According to the National Poverty Center, poverty rates have risen to 15.1 percent, the highest rate since 1993. Meanwhile, the country is witnessing the highest concentration of wealth since 1928.

Thus, political leaders in the US are searching for policy responses that can serve a dual purpose: reduce poverty and inequality, and also return the country to robust growth. Indeed, these two areas are closely related – a growing economy would create more jobs and opportunity, and by the same token, more people with higher incomes would increase consumption, putting more money back into the economy and boosting growth further in turn.

In this context, one such idea that has come to the forefront has been the proposal to raise the Federal minimum wage. In his State of the Union address in January, President Obama laid out a suite of measures aimed at reversing the United States’ long slide towards greater and greater inequality. He focused on the minimum wage as the center piece of this effort, vowing to unilaterally raise the wage for Federal workers to $10.10, and urging Congress to pass an across-the-board minimum wage increase to that same amount, up from the current Federal level of $7.25.

However, reflecting some opponents’ concerns, the Congressional Budget Office (CBO) last week released an analysis of likely outcomes of raising the minimum wage. Among other things, the CBO found that raising the minimum wage to $10.10 could lead to the loss of some 500,000 jobs.

In response, supporters of the increase attempt to make three distinct points: first, they dispute the evidence that minimum wage increases significantly reduce employment; second, they argue that there is evidence that it actually helps businesses by improving productivity; and third, they point to the non-employment benefits of the policy that must be weighed in any cost-benefit analysis.

On the first point, the White House Council of Economic Advisers argues that research shows little correlation between minimum wage increases and job losses. A comparison of 288 pairs of contiguous US counties with different minimum wage levels between 1990 and 2006 found “no adverse employment effects.” In addition, a meta-analysis of all minimum wage research published since 2000 found “little or no employment response to modest increases in the minimum wage.”

Part of the reason for this could be related to the second point, which is that higher wages, especially at the lower end of the income tail, may help raise worker productivity, which would save businesses money and allow them to hire more workers or pay their current workers more. There is evidence, too, that better paid workers are more motivated, work harder, and produce better outcomes.

In addition, studies from 2005, 2010, and 2013 show that higher wages reduce worker turnover, reducing employer costs on recruiting and training. Absenteeism also drops as wages rise, which, again, increases the productivity of both individual workers subject to wage increases, as well as their colleagues. The development of this virtuous circle is what has led major retailers like Costco to subscribe to a longer-term view of profitability based on investing in its workforce; the starting hourly wage at Costco is $11.50.

Finally, a third points supporters make is that even if a wage increase does have a small negative impact on jobs, that impact is outweighed by the positive impact in other areas, especially poverty. Specifically, President Obama’s proposal could reduce the number of people living in poverty by up to 4.6 million, and increase the income of over 16 million workers. Low wage workers would get an immediate income boost totaling $31 billion. These are important considerations as well.

Given that much of America’s current sluggish recovery is based on depressed consumer demand, there is also the possibility that putting more money directly into the hands of people that need it the most – and will spend it immediately – will itself boost growth, and with it, employment.

While there are a number of other potential initiatives that could help boost the recovery as well – from expanding the Earned Income Tax Credit to serious investments in critical infrastructure – there is growing political support for the idea that a minimum wage increase would confer serious, immediate benefits to the American economy. It remains to be seen where the idea will end up in Congress.