How economists see Biden's $15 wage proposal

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The fate of Biden's minimum wage proposal remains hazy. Facing resistance in Congress, the president has acknowledged that he will likely have to omit the measure from the $1.9 trillion COVID-19 financial relief package he is proposing and re-introduce it later as a separate bill.
WASHINGTON (AP) — President Joe Biden's effort to raise the federal minimum wage to $15 an hour could provide a welcome opportunity for someone like Cristian Cardona, a 21-year-old fast food worker. Cardona would love to earn enough to afford to move out of his parents' house in Orlando, Florida, and maybe scrape together money for college.

More than 1,000 miles away in Detroit, Nya Marshall worries that a $15 minimum wage would drive up her labor costs and perhaps force her to close her 2-year-old restaurant, already under strain from the viral pandemic.

Between Cardona's hope and Marshall's fear lies a roiling public debate, one with enormous consequences for American workers and businesses. Will the Biden administration succeed in enacting a much higher federal minimum wage — and should it? Economists have argued the merits of minimum wage hikes for years.

"The mother of all economic debates" is how economists Michael Feroli and Daniel Silver of JPMorgan Chase describe it.

The administration has cast its campaign to raise the minimum as a way to lift up millions of the working poor, reduce America's vast financial inequality and help boost the economy.

"No American should work full time and live in poverty," said Rosemary Boeglin, a White House spokeswoman. "Research has shown that raising the minimum wage reduces poverty and has positive economic benefits for workers, their families, their communities, and local businesses where they spend those additional dollars."

Yet just this month, the nonpartisan Congressional Budget Office estimated that while raising the minimum wage to $15 by 2025 would increase pay for 17 million people and pull 900,000 out of poverty, it would also end 1.4 million jobs. The reasoning is that employers would cut jobs to make up for their higher labor costs.



For years, there was almost no debate at all about a minimum wage. Classical economists had standard advice on imposing or raising minimum wages: Don't. Piling higher…
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