President-elect Joe Biden’s proposal to more than double the federal minimum wage would provide an urgent increase in wages for millions of low-income workers and help to stem inequality in the U.S., economists and labor advocates said.
When detailing your $ 1.9 trillion COVID-19 Relief proposal on Thursday, Biden called for raising the minimum wage to at least $ 15 an hour, saying, “Nobody who works 40 hours a week should still be below the poverty line.”
A fatter salary could help many Americans regain their financial balance during the ongoing recovery, including “essential” workers such as clerks and home health workers, whose jobs have put them on the front lines of a pandemic, but whose incomes are the lowest.
“Each worker must be paid a minimum wage of US $ 15, and essential frontline workers need payment of danger for the enormous health and safety risks they face during this pandemic,” said Marc Perrone, international president of United Food and Commercial Workers, to CBS MoneyWatch in a statement. The union represents 1.3 million retailers, supermarkets and other workers.
The plans of the next Biden government to raise wages also reflect a dramatically changing political landscape – one that can finally bear fruit for underpaid workers and grassroots activists who for years have been pushing for better wages and working conditions as part of the influential “Fight for $ 15” Campaign.
The success of the union movement can be seen in increases in the minimum wage in 20 states this year, with four other states and Washington, DC, also set to increase its baseline. pay later this year. In Florida, however, voters in December narrowly approved a measure to raise the state’s minimum wage to $ 15 an hour by 2026.
Same federal salary since 2009
The federal minimum wage, currently $ 7.25 an hour, has not changed since 2009, the longest period without an increase since it was approved in 1938. According to the U.S. Department of Labor, starting in 2019 (the last year for which data are available) 392,000 American workers earned $ 7.25 an hour; another 1.2 million earned even less (workers who received tips are among those exempted from the $ 7.25 minimum).
Overall, about 2% of all American workers who earn by the hour earn $ 7.25 or less, government data show. Raising the national minimum to $ 15 an hour by 2025 would raise 1.3 million workers above the wages that put them below the poverty line, according to the non-partisan Congressional Budget Office.
The CBO also estimated that the move would cost 1.3 million American jobs, a statement long ago by conservative economists. Biden’s call to raise the minimum wage to $ 15 an hour “is the last thing unemployed workers need now,” said Michael Farren, economist at George Mason University’s Mercatus Center, in an email. “After all, they cannot benefit from higher wages if those higher wages result in slower job growth.”
Heidi Shierholz, a senior economist and policy director at the left-leaning Institute of Economic Policy, rejects the argument that a wage increase would lead to job losses.
“This job loss claim is not supported by evidence – it is probably an overestimate of the negative impact on employment. But even if you accept their findings, they still think the benefits outweigh the costs,” Shierholz, former chief economist Department of Labor. Barack Obama, told CBS MoneyWatch.
The higher labor costs resulting from the increase in the minimum wage would be borne by companies, some of which would pass them on to consumers, according to CBO.
“The loss of corporate income would be borne mainly by families well above the poverty line. All consumers would pay higher prices, but higher income families, who spend more, would pay more of these costs,” said the CBO in a statement. 2019 report.
“There is no doubt that this would reduce inequality and poverty by transferring money from corporate profits to low-income workers,” said Shierholz. “Biden made it very clear that his economic plans are really focused on racial justice and gender economic justice. We know that women and men of color are probably at the bottom end of the wage distribution.”
Although labor groups applauded Biden’s pressure for higher wages, the political path of the proposal is uncertain. Democrats could try to approve Biden’s broader relief plan under budgetary reconciliation rules that escape the Senate’s 60-vote requirement.
But non-budget items are prohibited from reconciling, meaning items such as a minimum wage increase could not be included in a reconciliation measure, according to Brian Gardner, chief Washington policy analyst at investment bank Stifel Nicolaus.
Democrats in the House in the coming weeks are expected to reintroduce a version of the “Wage Increase Act” that passed the House two years ago, but never gained strength in the Republican-controlled Senate.