THE NEUTRAL ZONE: DEEP DIVE
Raising the federal minimum wage could deliver pay increases to millions of workers and lift nearly a million people out of poverty, according to a new report released by the Congressional Budget Office. But the $15-an-hour wage would also cost 1.4 million jobs.
The wage increase would move 900,000 Americans above the poverty line and give 27 million people income raises over the next four years. The nonpartisan Congressional Budget Office estimated budget deficits would increase by $54 billion over 10 years. Additionally, raising the minimum wage would increase net revenue and boost spending in programs like Medicaid and Medicare, while decreasing the costs of others such as the Supplemental Nutrition Assistance Program, or SNAP.
Potential job losses would affect 0.9% of workers, the budget office wrote, noting “young, less educated people would account for a disproportionate share of those reductions in employment.” Although some low-paid workers could potentially lose their jobs because of the wage increase, the office estimated that low-paid workers who keep their jobs would get paid an extra $51 billion a year through the next ten years, while total unemployment could fall by 2.7 million workers.
Nearly 60% of workers who would benefit from a $15 minimum wage are women, with roughly a quarter of these women being Black or Latina. Women were hit hard in the economic downturn, with more than 5 million losing their jobs in 2020. Women accounted for all of the 140,000 jobs lost from the American economy in December. Another 275,000 women left the workforce in January, bringing women’s labor force participation to a 33-year low. Raising the minimum wage would reverse growing pay inequality, especially along racial and gender lines, according to the Quarterly Journal of Economics.
Glenn Spencer, a senior vice president at the U.S. Chamber of Commerce, said the report validated the country’s most prominent business association’s concerns that the wage increase would kill jobs. But the association would be open to working with members of Congress on a stand-alone bill with bipartisan support for a “fair and reasonable” increase.
“Conservatives have been saying for a while that a recession is absolutely the wrong time to increase the minimum wage, even if it’s slowly phased in,” said Brian Riedl, a senior fellow at the Manhattan Institute.
Some experts argue that the CBO overstated the reduction in jobs and the impact on the deficit. Michael Reich, UC Berkeley Professor of Economics and Co-Chair of the Center on Wage and Employment Dynamics at the Institute for Research on Labor and Employment, said his estimates showed a $15 federal minimum wage having a positive effect on the federal budget.
Supporters of increasing the minimum wage highlighted the CBO’s findings about poverty reduction.
“Today’s report makes clear what we’ve known all along: raising the minimum wage — which hasn’t increased since 2009 — to $15 an hour isn’t just the right thing to do, it’s good policy,” Sen. Patty Murray, D-Wash., chair of the Senate’s Health, Education, Labor, and Pensions Committee, said in a statement.
The House of Representatives included a provision for the $15 minimum wage in the most recent version of Biden’s American Rescue Plan after the Senate voted to prohibit raising the minimum wage. While the goal is to reach $15 by 2025, the House Democrats’ plan would increase the current minimum wage from $7.25, which has not moved since 2009, to $9.50 by the end of the year, with tipped wages increasing from $2.50 to $4.95 in the same period. House Democrats also maintained the income limit for stimulus checks at $75,000 in their drafted coronavirus relief, rejecting an attempt by Senate Democrats to severely limit those who can receive a direct payment.
Senate Majority Leader Chuck Schumer, D-N.Y., said Democrats are working to get a minimum wage increase through with coronavirus relief, but he would not confirm if he believed it would pass through the Senate. President Joe Biden told CBS News he believed the minimum wage would not survive the Senate vote on the coronavirus relief bill because of the Senate rules but noted he is prepared to work on a separate negotiation for a minimum wage raise.
“The President remains firmly committed to raising the minimum wage to $15,” White House Press Secretary Jen Psaki told the press Monday. “That’s why he put it in his first legislative proposal, and he believes that any American who is working a full-time job trying to make ends meet should not be at the poverty level.”
This section includes an aggregation of articles showing different viewpoints on the topic.
Pramila Jayapal rallies Democrats after Joe Manchin rejects $15 minimum wage – Newsweek – 2/9/2021
The chance of the bill making it through the Senate, which is split 50-50 between Democrats and Republicans, is seen as slim afer centrists in the party expressed skepticism and Senator Joe Manchin (D-WV) publicly said he opposed the legislation. Speaking on The Rachel Maddow Show on MSNBC, Rep. Jayapal shared details of the fight to see the minimum wage proposal included in the $1.9 trillion relief plan. “This has been such a big priority for progressives for a decade, led by fast-food workers across this country,” she said.
Biden and Krugman Are Misleading the Public about Minimum Wage – National Review – 2/8/2021
A minimum-wage hike quenches the populist appetite of many voters. After all, it seemingly costs them nothing to compel greedy big business CEOs to pay the proletariat fairer wages. The problem is that a minimum wage is a tax on goods and services, and it’s not the big businesses that suffer, but small ones who can’t afford it. Nor are minimum-wage workers a static group of poor Americans.
Essential workers comprise about half of all workers in low-paid occupations. They deserve a $15 minimum wage. – Brookings – 2/5/2021
The COVID-19 pandemic has inspired an outpouring of gratitude for essential workers, whose critical and often low-paid work has kept the country functioning. Millions of these essential workers have risked their health on the COVID-19 frontline, while thousands have lost their lives. For months, leaders in Washington have said it is not enough just to praise essential workers—we must also pay them. In the long run, the best way for Congress to do this is to—finally—raise the federal minimum wage to $15 per hour.
Rep. Lisa McClain to Newsmax TV: Wage Increase Proposal a ‘Bumper Sticker Pipe Dream’ – Newsmax – 2/8/2021
Rep. Lisa McClain, R-Mich., says a $15 federal minimum wage increase would be detrimental to business owners. […] “Businesses are already strangled by the COVID policy. A lot of restaurateurs are at 25% and now we are going to overlay and tell them, ‘You can only run your business at 25%, and you have to pay your employees more.’
Infographic: How America’s Minimum Wage Compares – Statista Infographics – 2/9/2021
As the debate rumbles on, how does the current $7.25 federal minimum wage compare to other developed countries? It has to of course be mentioned that some U.S. states have moved to introduce even higher minimum wage thresholds with California and Washington notable examples where minimum hourly pay is higher than $13. OECD data shows that the U.S. trails many developed countries in the minimum wage league such as Australia where the rate of pay was $12.60 in 2019 constant prices at purchasing power parity. While France and Germany are also ahead of the current U.S. federal minimum wage, more than doubling it to $15 per hour would catapult the U.S. to the very top of the OECD’s ranking.
Biden Adviser on CBO Saying $15 Minimum Wage Will Cost Jobs: ‘We Have a Tendency to Focus on Some of the Big Negatives’ – Breitbart – 2/8/2021
On Monday’s “MSNBC Live,” White House Counsel of Economic Advisers member Jared Bernstein reacted to the Congressional Budget Office study showing that a $15 minimum wage would cost over 1 million jobs by saying that raising the minimum wage increases wages, “we have a tendency to focus on some of the big negatives,” and that “some of the more contemporary minimum wage research,” shows that increasing the minimum wage would have a smaller impact on jobs.
This section includes an aggregation of tweets showing different viewpoints on the topic.