The proposal by President-elect Joe Biden to increase the federal minimum wage to $15 per hour may result in job losses for over 1.3 million Americans.
Biden announced his $1.9 trillion budget this week in an effort to address the financial fallout from the new coronavirus outbreak. The president-elect’s plan includes a wealth of progressive goals in addition to increasing funding for vaccine distribution and offering assistance to areas and towns most affected by the virus.
One of Biden’s suggestions that has broad support among progressives is increasing the minimum wage to $15 per hour. When he originally entered the presidential race in April 2019, Biden supported the wage increase. He has since maintained that the current economic crisis brought on by the coronavirus offers the best chance to achieve the objective.
In a videotaped speech this week from Wilmington, Delaware, the president-elect declared, “There should be a national minimum wage of $15 an hour.” “Working forty hours a week should not lead to impoverishment.”
With Florida, a politically “divided” state that recently supported an initiative to raise the minimum wage to $15 per hour, Biden asserted that it was time for “the rest of the country… to move as well.”
The president-elect stated on Thursday that “there is genuine hardship crushing the real economy, one where people rely on wages, not their assets, to pay for their bills, their food, and their children’s necessities.”
In spite of Biden’s wish to stop the “genuine suffering overwhelming” the economy, his plan to increase the minimum wage to $15 might backfire.
Even if done gradually over five years, increasing the federal minimum wage from the present rate of $7.25 an hour to $15 an hour will probably result in the loss of more than 1.3 million jobs, according to July 2019 research by the bipartisan Congressional Budget Office (CBO).
The CBO concluded that there is “substantial uncertainty” about how employers would react to the wage increase in order to arrive at the 1.3 million estimate. The study also suggested that firms might anticipate worker reductions due to the significant proportion of minimum-wage jobs in the retail and service sectors. Economists also predict that employers—particularly those in the retail and service industries—will probably pass on the expense of any hike in the minimum wage to customers.
In summary, the CBO’s projection of 1.3 million jobs lost was merely a median estimate; the group suggested that the actual number of jobs lost may range from “zero to 3.7 million.”
