President Biden wants to gradually increases the federal minimum wage from the current $7.25, to $15. For now this will be apart of the New $1.9 trillion pandemic relief package. The house Democrats had voted for the $15 minimum wage and plan to do the same when they send the pandemic legislation to the Senate.
There is still a lot of debate about increasing the minimum wage. While backers have said that choosing to increase the minimum wage would help raise the living standard and help combat poverty; and with more money, workers would spend more, strengthening the economy. But while it may raise people out of poverty, many businesses as a result of the increase also let people go. According to a study done by the Congressional Budget Office, raising the minimum wage to $15 by 2025 would decrease employment by 1.4 million but will still raise 900,000 out of poverty.
Research was done in Fresno, which has one of California's highest poverty rates and one of its lowest median wages. Before the gradual increases under the 2016, the minimum wage was $10 and some business owners saw little impact from the wages. While others say especially due to the impact of the pandemic, costs are becoming untenable.
The biggest overall question is whether or not $15 is enough. For Fresno, the $15 min. is not enough. According to MIT's Living Wage Calculator, the living wage for a family of four, with both adults working is $22.52.
3 comments:
I like the idea of trying out a $15 minimums wage in an isolated spot. There is a lot of argument over whether a higher minimum wage would cause massive inflation or improve the living conditions of the poor. I always wondered, why not try it and see what happens? I would expect the impact on Fresno to be more significant that it would be on other cities, given such a high percentage of the population makes less than $15 an hour. Thinking about if $15 is enough, it surely is. With two adults working a minimum wage of $15 an hour full time, that would be over $60,000 dollars a year in net household income. Thats about the average household income in America, so to be making that on a minimum wage salary is great. Also the calculator is assuming that both parents are working minimum wage. Hopefully, either one or both of parents are making more than minimum wage by the time children come around. With a minimum wage of $15, a single person with 0 children is already earning above the living wage of $14. So certainly, $15 an hour is enough for minimum wage.
I find it interesting that Biden is attempting to place the wage increase as part of the pandemic relief. I wonder if the wage increase would only apply for the pandemic and return to normal afterwards. It seem like to Biden should have sought pass an individual law increase the wage, if that the prior statement is true. Although the republicans in the senate would attempt to stop the law passing so maybe it works better under the covid relief. At the same time I could be wrong and the increase could remain after the pandemic
In places where COVID-19 has struck the hardest like in New York, many small businesses, families, and individuals struggle to make ends meet with measly incomes. There are several proposals on the table - universal basic income (or stimulus), raising the minimum wage, etc. Instead of raising the minimum wage, city government or gubernatorial positions may also propose to implement separate plans to help assist smaller businesses and individuals to get back on their feet (perhaps negotiating something with landlords?). In places like New York with once-bustling tourism, vaccine distribution along with economic relief is required to help bring people back to and perhaps upgrade their living/working situations.
However, these proposals come at a cost. Where will we get the money for these programs? How will small businesses who hire part/full-time workers afford increases due to an increase in minimum wage rates? Small businesses make up substantial amounts of the US economy, private sector, and employment rates. These businesses may end up with smaller staff, which may directly influence employment and unemployment rates. On the other hand, economists have also observed that many smaller businesses also tend to raise their product prices instead of reducing their staff size, which is considered to be inflation.
How high should minimum wage be realistically raised to? If we were to raise it, the US definitely needs to implement practical increases based on a timetable, so we can observe the long and short-term effects of such a plan without imposing huge economic risks.
https://www.npr.org/transcripts/962124776
https://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf
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