Raising the Minimum Wage Would Boost an Economic Recovery—and Reduce Taxpayer Subsidization of Low-Wage Work - Center for American Progress

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Raising the minimum wage can provide a potent and responsible stimulus to the economy.
President Joe Biden included a long overdue pay raise for millions of America's minimum wage workers in his $1.9 trillion rescue plan rolled out last week. Its inclusion immediately came under fire by those who argue it is extraneous to an economic recovery and divisive. However, research from the Center for American Progress and many economists shows that getting money into the hands of those who are most likely to spend it will boost their communities and the national economy and also reduce federal spending.

Since 2014, CAP has demonstrated that an increase in the minimum wage would significantly decrease the use of the Supplemental Nutrition Assistance Program (SNAP), as millions of workers are currently paid so little that they must rely on the public social safety net. Indeed, an increase to the federal minimum wage (and the elimination of the subminimum wage for people who work for tips and people with disabilities) would have broad benefits for the economy beyond the wages of affected workers. Wage increases—particularly for those at the bottom of the income spectrum—increase community-level economic activity and support local businesses; reduce the amount by which taxpayers subsidize corporations for the low wages they pay; and reduce the pay inequalities for women and people of color that depress overall economic growth.

An increase to the minimum wage would be far from divisive: American voters have repeatedly signaled broad, bipartisan support for raising the minimum wage to $15. In November, 61 percent of Florida voters supported a ballot measure to do just that, even as the state's voters backed Donald Trump for reelection. The percentage of Americans who say that they support raising the minimum wage has grown during the pandemic—66 percent of Americans supported raising the minimum wage in February 2020, while 72 percent supported it by August 2020.

The failure of the Senate in recent years to pass minimum wage legislation has meant real,…
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