President-elect Joe Biden’s proposal of more than double the federal minimum wage would provide an urgent rise in the pay of millions of low-income workers and help curb inequality in the United States, economists and labor advocates said.
In detailing his $ 1.9 trillion COVID-19 Biden on Thursday called for a relief proposal to raise the minimum wage to at least $ 15 an hour and said, “No one working 40 hours a week should still be below the poverty line.”
A larger salary could help many Americans regain their financial level during the ongoing recovery, including “essential” workers, such as grocery employees and domestic health care workers, whose jobs have taken the top spots. of a pandemic, but whose gains are among the lowest.
“All workers should be paid a minimum wage of $ 15 and the necessary front-line workers should be paid a risk for the enormous health and safety risks they suffer during this pandemic,” he told CBS MoneyWatch Marc Perrone, International President of Food and Commercial Workers United. in a statement. The union represents 1.3 million retail workers, grocers and others.
The Biden administration’s entry plans to raise wages also reflect a dramatically changing political landscape, which could eventually pay off for low-paid workers and grassroots activists who for years have pushed for better wage and working conditions such as apart from the influential ones “Fight for $ 15” Campaign.
The success of the labor movement can be seen in the minimum wage hikes in 20 states this year, with four other states and Washington, DC, which will also increase their baseline. pay later this year. Meanwhile, in Florida the December voters approved closely a measure to raise the state’s minimum wage to $ 15 an hour by 2026.
The same federal salary since 2009
The federal minimum wage, currently at $ 7.25 per hour, has not changed since 2009, the longest period without increasing since it was passed in 1938. According to the U.S. Department of Labor, as of 2019 (the last year for which data are available)) 392,000 American workers earned $ 7.25 per hour; another 1.2 million earned even less (tip workers are those who are exempt from the $ 7.25 minimum).
In general, approximately 2% of all U.S. workers who pay by the hour earn $ 7.25 or less, according to government data. Raising the national minimum to $ 15 an hour in 2025 would raise 1.3 million workers above wages that would place them below the poverty line, according to the nonpartisan Congressional Budget Office.
The CBO also estimated that the measure would cost 1.3 million American jobs, a claim made long ago by conservative economists. Biden’s call to raise the minimum wage to $ 15 an hour “is the last thing unemployed workers need right now,” Michael Farren, an economist at the Mercatus Center, said in an email. located on the right, at George Mason University. “After all, you can’t benefit from higher wages if those higher wages result in slower employment growth.”
Heidi Shierholz, a senior economist and policy director at the Negatively Oriented Institute for Economic Policy, rejects the argument that a pay rise would lead to job losses.
“This claim of job loss is not backed by evidence; it is probably an overestimation of the negative impact on employment. But even if you accept their findings, they still consider the benefits far outweigh the costs.” , said Shierholz, former chief economist at the Department of Labor. Barack Obama told CBS MoneyWatch.
Companies would have to bear higher labor costs due to the increase in the minimum wage, some of which would be passed on to consumers, according to the CBO.
“The loss of business income would be borne mostly 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,” he said. ‘OBC in a 2019 report.
“There is no doubt that this would reduce inequality and reduce poverty by shifting business benefits money to low-wage workers,” Shierholz said. “Biden has made it very clear that his economic plans really focus on racial justice and gender economic justice. We know that women and men of color are likely to be at the bottom of the payroll.”
While labor groups applauded Biden’s push for higher wages, the political path of the proposal is uncertain. Democrats could try to pass Mr. Biden’s broader expansion plan under budget conciliation rules bordering the Senate’s 60 votes.
But it is forbidden to reconcile items unrelated to the budget, so items such as a minimum wage increase could not be included in a conciliation measure, according to Brian Gardner, a Washington policy analyst at investment bank Stifel Nicolaus.
Democrats in the House are expected to reintroduce in the coming weeks a version of the “Wage Rise Act” passed in the House two years ago, but which never gained strength in the Republican-controlled Senate.