- Biden is pushing ahead with raising the minimum wage to $US15 an hour even as the downturn takes a toll on small businesses.
- The Biden campaign hasn’t laid out a timeline to implement it, and it did not respond whether it supported a House bill that would raise it to that level by 2025.
- Congress last raised the federal minimum wage in 2009. It’s the longest stretch without a wage hike in US history.
- Republicans oppose it, arguing it hurts employers and causes job losses.
- A growing amount of economic research so far indicates employment hasn’t been negatively impacted in states and cities that implemented hourly wage increases.
- Visit Business Insider’s homepage for more stories.
Democratic presidential nominee Joe Biden is sticking by his push to raise the minimum wage to $US15 an hour, a move that would bump paychecks for millions of low-wage workers hit hard by the pandemic.
Biden and President Donald Trump clashed on the issue at Thursday’s presidential debate. Asked about increasing workers’ pay when many small businesses are struggling, Biden responded he still believed it was necessary to increase the hourly wage to $US15.
“I do, because I think one of the things we’re going to have to do we’re going to have to bail them out too â€” we should be bailing them out now, those small businesses,” Biden said.
Trump, however, argued lifting wages would harm employers and said it should be left up to the states. “I think it should be a state option. Alabama is different than New York, New York is different from Vermont,” he said. “Every state is different.”
The president has adopted various positions to a minimum wage hike since 2016, having previously expressed an openness to a higher wage floor.
The divide between the candidates highlights many years of heated economic debate on the impact of raising minimum wages on employment levels. A growing body of research so far indicates that some state and city-wage increases in recent years hasn’t set back the ability of employers to hire more workers. Evidence of job losses has not been consistent.
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Last year, the Democratic-led House approved a plan to gradually lift the federal minimum wage to $US15 an hour by 2025. The GOP-controlled Senate dismissed the legislation and never took it up.
Biden has unveiled a plan to increase the federal minimum wage and index it to the median hourly wage, so low-wage employees’ incomes keeps pace with those of salaried middle-income workers. The campaign hasn’t laid out a timeline to implement a $US15 hourly wage. It did not respond to a request for comment on whether it supported the House bill, called the “Raise the Wage Act.”
“One other thing that people may not realise is we’ve raised the minimum wage in weak economies in the past,” Jared Bernstein, an outside economic advisor to Biden and formerly a top aide during his vice presidency, told Business Insider. “The results have been the same.”
The push for $US15 an hour and its possible impacts
A nonpartisan analysis of the House Democratic proposal produced mixed findings. The Congressional Budget Office estimated it could increase paychecks for 27.3 million low-wage workers and lift 1.3 million workers out of poverty. It also suggested the economy could shed 1.3 million jobs.
Ben Zipperer, an economist at the progressive Economic Policy Institute, argues lifting wages would boost workers’ incomes during a period when wage growth tends to sharply slow down and even decline.
“Workers really need the money during a downturn, especially the one now when high levels of unemployment are putting significant downward pressure on wages,” Zipperer told Business Insider. “That’s especially true for people at the bottom of the wage distribution where a lot of the employment losses have been in the pandemic.”
But conservative economists say the opposite. They claim setting a $US15 hourly wage would increase labour costs, constraining business growth and hurt the economy as a result.
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“The U.S. economy will be very weak throughout 2021. The nation will need more business income, not less; more jobs, not fewer; and faster, not slower, economic growth,” Michael Strain, the director of policy studies at the right-leaning American Enterprise Institute, wrote in a Bloomberg op-ed. “A $US15 minimum wage would move the economy in the wrong direction across all these fronts.”
Trump echoed that during the debate as well. “How are you helping your small businesses when you’re forcing wages?” he said. “What’s going to happen, and what’s been proven to happen, is when you do that, these small businesses fire many of their employees.”
“I think many of these folks are impervious to evidence,” Bernstein, a senior fellow at the left-leaning Centre on Budget and Policy Priorities, said. He also argued raising wages would stimulate demand by providing more money to workers who are the likeliest to spend it.
A 2019 analysis of over 130 minimum wage increases implemented since 1979 indicated the decline in jobs paying the hourly wage were offset by a rise in the number of jobs that paid more.
Americans overwhelmingly back a $US15 minimum wage
Congress last raised the federal minimum wage from $US6.55 an hour to $US7.25 an hour in 2009 during the Great Recession. The current wage amounts to $US15,000 a year for a person working 40 hours a week.
In the past decade, lawmakers have not authorised any hourly pay hikes, the longest the US has gone without one since a wage floor was enacted in 1938. Republicans rejected attempts from Democrats to raise it during Barack Obama’s presidency.
Many states and local governments increased minimum wages on their own, said Ernie Tedeschi, a policy economist at Evercore ISI, which helped lift incomes. Currently, 29 states plus the District of Columbia have implemented higher wages than what the federal government mandates.
Federal inaction also spurred a drive among progressive activists to raise it, culminating in the “Fight for $US15” movement. The position garnered traction in last year’s Democratic primary, with most presidential candidates endorsing a $US15 hourly wage as part of their platforms. Now 22 mostly large cities â€” including San Francisco, Seattle, and Los Angeles â€” have a minimum wage that’s $US15 or above.
Surveys have found widespread public approval for the measure as well.
Trump’s position opposing a $15 minimum wage was one of the more unpopular things he said last night. pic.twitter.com/mAW8pBQVhb
— Will Jordan (@williamjordann) October 23, 2020
A Pew Research Centre poll last year indicated 67% of US adults favoured raising the wage floor to $US15 an hour. Only 33% opposed it. A Business Insider poll conducted last summer found similar levels of support for it as well.
“Five to ten years ago, a $US15 minimum wage was not a national issue. Now it is,” Zipperer said. “It’s both a combination of the success of a labour movement and people’s growing awareness of how poorly some people in our economy are paid.”