Biden wants a minimum wage of $ 15. This is what people say they would do to the economy

Some large domestic businessmen have behaved well during the pandemic, Bharat Ramamurti, deputy director of the Biden National Economic Council, said in an interview. “The compensation of its employees has not necessarily reflected this. Raising the minimum wage is a way to give workers a fairer share of the income they help generate. ”

Several states, including California, Florida and Massachusetts, are already on track to reach a minimum wage of $ 15 in the coming years, but Ramamurti said the flat should be applied to areas with a higher cost of living. low. An increase in the federal minimum wage requires congressional approval.

“No matter where you work in America, if you work full time or 40 hours a week, you shouldn’t live in poverty,” he said. “A minimum wage of $ 15 gets it.”

Economists are divided on the effects of the $ 15 minimum wage. Some have analyzed the mosaics of state and local increases and found little loss of employment relative to nearby areas with low lows. But others say job losses tied to a $ 15 minimum wage could be more severe, especially in states with a relatively low cost of living.

The impact would be felt in more rural states, such as Mississippi, according to opponents. According to the Department of Labor, half of all workers were earning $ 15 an hour or less in 2019. This includes dishwashers, cashiers, firefighters and construction workers. Nearly half of Arkansas, West Virginia and Louisiana workers earned less than $ 15 an hour.

The previous peak of the federal minimum wage was set at 1968, at about $ 12.25 per hour, when it adjusted to the 2020 dollar. If the current rate were to adjust to inflation since it was set in 2009, it would be just under $ 9 an hour.

Opponents of a large increase say policymakers should be particularly concerned about job losses in low-wage industries such as the leisure and hospitality sector, which left 3.8 million jobs last year.

More than 37% of workers who earned the federal minimum wage in 2019 worked in restaurants, hotels and other places in the hospitality sector, according to the Department of Labor. Retail workers accounted for almost 23% of minimum wage earners and education and health employees, including home health aides, accounted for 14%.

“It’s a potentially catastrophic policy mistake,” Kevin Hassett, former economic adviser to former President Donald Trump, said about the $ 15 minimum wage. The pandemic, he said, pushed many small businesses on the brink of bankruptcy, but these restaurants and other businesses remain, expecting profits later this year, when the economy can open. An increase in the minimum wage would reduce expected profits and cause companies to close, he said. “It will cost a lot of people work.”

Hassett said low-wage workers have been disproportionately harmed by the pandemic and that the government should support them through direct payments rather than forcing private companies to raise wages.

The non-partisan Congressional Budget Office found in a 2019 study that raising the federal minimum wage to $ 15 an hour in 2025 could cost 1.3 million Americans their jobs. The same study found that the highest level could increase wages by about 27 million workers and lift 1.3 million Americans out of poverty.

Many companies admit to raising the minimum by $ 7.25, but do not support a level of $ 15 per hour.

“While we continue to support an increase in the federal minimum wage, we believe the increase should be designed thoughtfully to reflect regional differences in wage rates and to ensure that the increase does not harm the recovery of small businesses, ”said Joshua Bolten, president of Business Roundtable, a lobby that represents top business executives.

The US Chamber of Commerce and Walmart Inc.

Executive Chairman Doug McMillion has made similar statements. Walmart, the country’s largest private employer, creates workers at $ 11 an hour.

Walmart said in a statement that its initial pay rate is “more than 50% higher than the federal minimum wage, which Washington has not changed in more than a decade. We support efforts to raise the minimum wage as we continue.” making investments in our partners “.

Some other big business, including Amazon.com Inc.

and goal Corp.

they have raised their starting wages to $ 15 an hour.

Paul Flick, CEO of Premium Service Brands, said that more than doubling the minimum wage would cause franchisees of brands operated by his Charlottesville, Virginia company, including 360º Painting, Handyman Pro and Maid Right, to raise prices.

“I’m not opposed to a raise, but more than a 100% jump is paralyzing,” he said. “This can’t be absorbed, so it has to be passed on to the customer … and if they can’t afford to buy the service, that means layoffs.”

While 29 states have raised their minimum wages above federal ground, workers’ advocates say a higher mandate is also needed because employees in big cities like Atlanta, Houston and Philadelphia can pay as little as 7.25 dollars per hour. Georgia, Texas and Pennsylvania follow the federal rate.

Wanda Lavender, 39, said she earns $ 12 an hour in Milwaukee, Washington, as the area manager for Popeyes restaurants. He took the position because he offered an increase in daycare work of $ 9 per hour he had. Wisconsin is among the states with a minimum of $ 7.25 per hour.

He works 40 to 60 hours most weeks, but said it’s still hard to pay him rent and electricity and phone bills. An increase of $ 15 per hour would give him more room to breathe and allow him to spend more time with his children. Like Mrs. Lavender, the minimum wages are disproportionately women and black workers.

“I miss the excursions and the performances and the parent-teacher conferences,” he said. “I can’t take a day off to be with them because otherwise I won’t make the bills.”

Arindrajit Dube, an economist at the University of Massachusetts-Amherst, found little impact on employment in his study of minimum wage increases, but saw clear benefits against poverty.

“Raising the minimum wage will lift millions out of poverty and these families will not have to rely on government aid,” he said.

The Institute for Economic Policy, a left-wing think tank, said a minimum wage of $ 15 would reduce spending on public assistance programs between $ 13.4 billion and $ 31 billion annually, in the form of fewer tax credits and less nutritional assistance. These effects are the reasons why some Democrats claim that a minimum wage increase could be advanced through a process known as reconciliation, which requires only a simple majority in the Senate.

Getting out of these reconciliation procedures would likely cause an obstacle, which would require 60 votes to overcome. This is unlikely in the tightly divided Senate, given the widespread Republican opposition to a $ 15 minimum wage.

Jonathan Meer, an economist at Texas A&M University, said a $ 15 minimum wage will encourage companies to use self-monitoring kiosks and other technology to replace workers and encourage companies to pay for books for workers.

“In rural areas of the country, people will continue to work, but it will not be $ 15 per hour,” he said. “They will be paid under the table and therefore give up unemployment insurance, workers’ compensation and do not accumulate Social Security benefits.”

Write to Eric Morath to [email protected]