President-elect Joe Biden’s proposal to raise the national minimum wage to $15 an hour could put more than 1.3 million Americans out of work.
On Thursday, Biden unveiled his $1.9 trillion dollar spending plan meant to tackle the economic consequences of the novel coronavirus pandemic. The president-elect’s proposal, which seeks to allocate more money for vaccine distribution and provides a bailout for cities and states hit hardest by the virus, also includes a trove of progressive priorities.
Included among the list of Biden’s proposals that also have wide progressive backing is raising the minimum wage to $15 an hour. Biden, who endorsed the wage hike when he first jumped into the White House race in April 2019, has argued that the economic crisis created by the coronavirus presents the best opportunities to accomplish the goal.
“There should be a national minimum wage of $15 an hour,” the president-elect said during a televised address from Wilmington, Delaware, on Thursday. “Nobody working 40 hours a week should be living below the poverty line.”
Noting that a politically “divided” state such as Florida had just approved raising the minimum wage to $15 an hour via ballot initiative, Biden claimed it was time for “the rest of the country … to move as well.”
“There is real pain overwhelming the real economy, one where people rely on paychecks, not their investments, to pay for their bills and their meals and their children’s needs,” the president-elect said Thursday.
Despite Biden’s desire to put an end to the “real pain overwhelming” the economy, his proposal to raise the minimum wage to $15 could have the opposite effect.
A study conducted by the bipartisan Congressional Budget Office (CBO) in July 2019 found that raising the federal minimum wage from the current rate of $7.25 an hour to $15 an hour, even if done incrementally over five years, would likely result in more than 1.3 million jobs lost.
In coming to the 1.3 million estimate, the CBO determined there is “considerable uncertainty” about how employers would respond to the wage hike. The study, in particular, noted that because a large portion of minimum wage jobs are in the retail and service industries, employers could be expected to cut back on staff. Similarly, economists estimate employers, especially in the retail and service fields, are likely to pass on the cost of any increase in the minimum wage to consumers.
Overall, the CBO’s 1.3 million figure was only a median estimate, with the organization suggesting the real number of jobs lost could be anywhere between “zero and 3.7 million.”