President-elect Joe Biden’s proposal to more than double the federal minimum wage would mean an urgent wage increase for millions of low-income workers and help reduce inequality in the US, economists and labor advocates say.
When working out his $ 1.9 trillion COVID-19 Emergency response proposal on Thursday called on Mr Biden to raise the minimum wage to at least $ 15 an hour, saying, “No one who works 40 hours a week should still be below the poverty line.”
A fatter salary could help many Americans regain their financial position during the ongoing recovery, including “essential” workers such as grocery advisers and home care workers whose jobs have placed them on the front lines of a pandemic but whose earnings are among the lowest.
“Every worker should be paid a minimum wage of $ 15, and key frontline workers need risk compensation for the tremendous health and safety risks they face during this pandemic,” Marc Perrone, international president of the United Food and Commercial Workers, told me CBS MoneyWatch in a statement. The union represents 1.3 million retailers, grocery stores and other employees.
The upcoming Biden government’s plans to raise wages also reflect a dramatically changing political landscape – one that could finally pay off for low-paid workers and grassroots activists who have pushed for better wages and working conditions for years as part of the influential “Fight for $ 15” Campaign.
The success of the workers’ movement can be seen in minimum wage increases in 20 states this year, with another four states and Washington, DC, also set to raise their baselines. pay later this year. In Florida meanwhile voters narrowly approved in December a measure to raise the state’s minimum wage to $ 15 an hour by 2026.
Same federal wages since 2009
The federal minimum wage, currently $ 7.25 an hour, has not dropped since 2009, the longest no increase since it was passed in 1938. According to the US Department of Labor, as of 2019 (the last year for which data is available), US 392,000 workers earned $ 7.25 an hour; another 1.2 million earned even less (Tipped employees are among those exempt from the $ 7.25 minimum.)
In total, about 2% of all U.S. workers paid by the hour earn $ 7.25 or less, government data shows. Raising the national minimum to $ 15 an hour by 2025 would raise 1.3 million workers above the wages that would bring them below the poverty line, the impartial Congressional Budget Office said.
The CBO also estimated the move would cost 1.3 million US jobs, a claim long made by conservative economists. Mr. Biden’s call to raise the minimum wage to $ 15 an hour “is the absolute last thing that unemployed workers need right now,” said Michael Farren, an economist at the right-leaning Mercatus Center at George Mason University. an e-mail. “After all, they can’t take advantage of higher wages if those higher wages result in slower job growth.”
Heidi Shierholz, senior economist and policy director at the left-wing Economic Policy Institute, rejects the argument that a pay rise would lead to job losses.
“That claim of the loss of jobs is not supported by evidence – it is likely an overestimation of the negative impact on employment. But even if you accept their findings, they still feel the benefits far outweigh the costs,” said Shierholz, former Labor Department chief economist. Barack Obama, CBS told MoneyWatch.
According to the CBO, the higher labor costs by raising the minimum wage would be borne by companies, some of which would pass on to consumers.
“The loss of business income would be mainly borne by families well above the poverty line. All consumers would pay higher prices, but higher-income households who spend more would pay more of these costs,” the CBO said in a report. from 2019..
“There is no doubt that this would reduce inequality and poverty by shifting money from corporate profits to low-paid workers,” said Shierholz. “Biden has made it very clear that his economic plans are really geared towards racial justice and economic justice between men and women. We know that women and men of color are likely to be at the bottom of the wage split.”
While workgroups support Mr. To cheer Biden for higher wages, the political path of the proposal is uncertain. Democrats could try to approve Mr Biden’s broader contingency plan based on budget reconciliation rules that circumvent the senate’s 60-vote requirement.
But non-budget-related items are banned from reconciliation, meaning items such as a minimum wage increase cannot be included in a reconciliation measure, said Brian Gardner, Washington’s chief policy analyst at investment bank Stifel Nicolaus.
Democrats in the House are expected to reintroduce in the coming weeks a version of the “Raise the Wage Act” passed in the chamber two years ago but never gained traction in the Republican-controlled Senate.