Understanding the Proposed $15 Federal Minimum Wage
One of the most hotly contested policy issues in recent years has been around the proposed increase to the federal minimum wage. Currently, the wage is set at $7.25 per hour and has not increased since 2009, but there has been a push to raise this to a $15 federal minimum wage by 2025, with a proposal that also calls for continued increases thereafter. The Biden administration has cited raising the federal minimum wage as one of its big policy goals, but there is significant opposition, and the COVID-19 pandemic has pushed the timeline out further than originally planned. At present, over 50% of states have raised their minimum wage laws about the $7.25 federal minimum wage, and while some are phasing into a $15 minimum wage, zero states have reached that yet.
BENEFITS AND DRAWBACKS OF A $15 FEDERAL MINIMUM WAGE
Now, what are the arguments for and against a $15 federal minimum wage? Let us start with the arguments in favor. Aside from the fact that this would boost 17 million low wage workers in America, it would also:
- Bring ~900,000 people out of poverty
- Increase spending on goods and services by lower income families
- Increase federal government revenues derived from labor income
As for the arguments against a $15 federal minimum wage, the most obvious case is that this would severely hurt businesses that may no longer be able to employ these low wage workers after such a significant wage increase. It would also:
- Eliminate ~1.4 million jobs
- Disproportionately impact younger people seeking entry level and service positions
- Raise the federal deficit by ~$54 billion
- Raise Medicaid, Medicare, Social Security, and Unemployment Insurance spending
Clearly, there are solid arguments on both sides, which can explain why this is such a hotly contested issue.
ONGOING LEGISLATION FOR $15 FEDERAL MINIMUM WAGE
Given how much of a financial burden the COVID-19 pandemic has created on many Americans, the proposed $15 federal minimum wage has largely fallen on the backburner for the time being. Some politicians are still trying to loop a minimum wage increase into the $1.9 trillion stimulus package, but many lawmakers on both sides are in favor of tabling the minimum wage discussion until after the pandemic ends. So far, prior attempts to raise the federal minimum wage have failed, as lawmakers are split largely along party lines.
PROSPECTS OF A $15 FEDERAL MINIMUM WAGE
So, after all that, what are the actual prospects of a $15 federal minimum wage? Well, in the near-term, the prospects are next to zero since getting through the COVID-19 pandemic has been the main priority. However, in the long term, the odds are slightly better given that Democrats control the White House and Congress. While a proposed measure would have a good chance in the House of Representatives, Democrats would need all 50 of their Senate votes and they would need to swing 10 Republican votes in order for it to pass. As such, it will be no easy feat to pass a $15 federal minimum wage, and both Democratic and Republican lawmakers will continue to push their cases for and against. Only time will tell how things play out!
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