The Cost of the Minimum Wage

Due to the coronavirus pandemic, ordinary workers have suffered unprecedented economic challenges. With non-essential businesses having to close or function at lower capacity, many workers have had difficulty putting food on the table or paying bills. 

Earlier this year, President Biden introduced a $1.9 trillion relief bill which would provide $1400 direct payments to those in need. But an additional provision was included, one that raises the federal minimum wage to $15 an hour. This provision was especially controversial.

Those in favor of the increase argue that raising the minimum wage is necessary to ensure that workers have a living wage, especially during these trying times. The federal minimum wage has been $7.25 since 2009, with certain states setting it higher than the national average and eight states setting it at $15. With The Balance reporting that someone working at the current minimum wage would be considered below the poverty line, it seems that $7.25 is simply not enough to make ends meet. In addition, workers below the poverty line are disproportionately minorities. According to a fact sheet about the minimum wage, the increase would reduce racial and gender inequality in employment– ⅓ of all Black workers and ¼ of all Latinxs would get a raise. And 60% of those who would benefit from a higher wage would be women. 

Despite these advantages, those who oppose the increase worry that it may have too many negative effects. The Congressional Budget Office (CBO) estimated that, although raising the minimum wage would bring 900,000 workers out of poverty, it would also increase the budget deficit by $54 billion in 10 years and would lead to 1.4 million job losses. It may also hurt small businesses, forcing them to pay their employees higher wages and keeping them from hiring new workers due to the increased cost. 

President Biden’s relief bill passed the House with the $15 minimum wage provision, however the provision failed to pass in the Senate. Senate Democrats had been trying to make the bill easier to pass through a process called budget reconciliation, which would allow the bill to pass with a simple majority in the Senate. But there’s a catch: the wage increase needs to directly impact the federal budget to be used in reconciliation in a requirement called the ‘Byrd Rule.’ Current Senate parliamentarian Elizabeth MacDonough, who makes the rules for Senate proceedings, advised that reconciliation was not applicable in this case and that the minimum wage increase could not be included in the relief bill, but Democratic Senator Bernie Sanders will still be trying to force a vote on it. Getting this bill passed will not be a smooth process anytime soon.

But another bill has the potential to bring the minimum wage back to Congress’ attention. In January 2021, Democrats introduced the Raise the Wage Act of 2021, a bill that would gradually raise the federal minimum wage to $15 by 2025. It already has hundreds of cosponsors in both chambers of Congress, as listed on the Fight For $15- an organization dedicated to bringing the federal minimum wage up to $15- website. There is definitely still hope for workers and time for debate for opponents. 

Article by Zoe Duni of Walter Johnson High School

Photo Courtesy of Fibonacci Blue via Creative Commons