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Illustration by Katie Ferreol

Biden’s $15 Minimum Wage Plan Won’t Help

President Joe Biden wants to increase the U.S. minimum wage. While workers deserve higher pay, Biden’s plan will cause more economic harm than good.

Feb 20, 2021

The summer after my senior year of high school, I worked a full time minimum wage job as a hostess and waitress at a chain restaurant. I not only waited on customers, but was also in charge of cleaning tables, floors, bathrooms and the parking lot before and after closing. In addition, I organized wait staff shifts, assigned sections and greeted and seated customers. I dealt with rude customers, chaotic families, screaming children, drunken bar regulars and creepy men. I was usually the first person at work and one of the last to leave, sometimes working 14-hour shifts. And because I was a minor, I was only paid $4.25 an hour. I earned tips, but I wasn’t allowed to earn more than $7.25 an hour, meaning that I only got to keep three dollars worth of hourly tips when I could have easily earned up to $30.
Fortunately, I was still living with my parents, who accounted for all my needs, and was only working to save extra money for college. But if I had to work that job as a way to provide for myself, I would have ended up on the street. Working 40 hours a week, making the maximum $7.25 an hour, would leave me with $1,160 a month and $13,920 a year. In my county, the monthly and annual self-sufficiency wage, or the minimum necessary income to meet all basic needs without government assistance, are $1,627 and $19,530 respectively for a one-person household.
$7.25 has been the federal minimum wage since 2009, and its value has declined due to inflation. U.S. citizens have been fighting for a higher federal minimum wage for years, and in the wake of the pandemic, their efforts have become far stronger. Increasing the minimum wage would certainly be beneficial for both U.S. families and federal spending. The Economic Policy Institute published a study showing that a $15 federal minimum wage would reduce expenditures on public assistance programs by 30 percent and double payroll tax revenue.
Recently, President Biden announced his $1.9 trillion Covid-19 economic relief plan, which includes measures to increase the minimum wage. Democrats also reintroduced the Raise the Wage Act, which would increase the minimum wage to $15 an hour by 2025 through budget reconciliation. This Act would speed up the process of minimum wage increases because budget reconciliation does not require high levels of support from Republican senators.
Even though Republican support is not needed with the current Democratic strategy, Republicans and Democrats alike are in favor of a higher minimum wage. Even former President Trump commented on the potential benefits for citizens and the country overall. Nonetheless, raising the minimum wage to $15 would raise unemployment. The nonpartisan Congressional Budget Office found in 2019 that a $15 minimum wage would eliminate 1.3 million jobs.
Given the current economic situation, the U.S. needs rapid economic growth to create jobs and increase business income. Doubling the minimum wage would pose an obstacle to these improvements. An increase in the minimum wage will lead to fewer low-wage jobs because the pay increase created by a higher minimum wage cannot compensate for the subsequent reduction in employment. Furthermore, the least experienced, least educated and youngest workers of the U.S. would be disadvantaged as companies may want to hire smaller, more skilled teams to reduce employment costs.
The benefits of raising minimum wages outweigh the costs, especially considering its benefits to those hit hardest by the pandemic. But doubling the minimum wage would be extreme, and the process of raising minimum wages is best left to state and local governments. Doubling the federally mandated minimum wage would have catastrophic effects on businesses and the economy, and it would, in the end, create more economic inequality nationwide. A $15 minimum wage in the state of Mississippi would be the equivalent of a $35.74 minimum wage in Washington D.C. because of the cost of living disparities.
State and local level governments have a better understanding of regional economic conditions, which allows them to set more reasonable minimum wages. Some states, including New York, New Jersey, California, Illinois and Florida, have already passed legislation to increase their minimum wage to $15 an hour. Many states also have minimum wages higher than the federally mandated amount already. A $15 minimum wage nationwide would be absurdly high for states and counties with below average living costs. Allowing local and state governments to dictate the minimum wage would also allow small business owners who can’t afford to pay the minimum rate to relocate somewhere where they can still feasibly earn a living and turn a profit.
A lot of opposition to Biden’s plan to raise the minimum wage is misplaced. Many dissenters of a $15 minimum wage are middle-class citizens working on a fixed, annual salary. They oppose a higher minimum wage because it makes them realize that they’re being underpaid in their salaried positions. A full time employee working for $15 an hour will earn nearly $32,000 a year, not including overtime or tips for those in the service industry. The national average annual salary, at $53,490, doesn’t sit a lot higher than $32,000. Workers in salaried positions who have college degrees and advanced training are upset that there isn’t a larger gap between their earnings and that of the minimum wage and assumedly unskilled workers.
This form of dissent marks a larger issue of perception: that of the purpose of minimum wage positions. Many argue that minimum wage positions are only temporary positions for people between normal salaried positions or sources of “extra cash” for young adults, not sources of complete support for workers. Minimum wage positions serve as opportunities for citizens with little education and few skills, and are certainly meant to provide sufficient income for full time workers. However, I would argue that in the majority of cases, minimum wage workers work just as hard, if not harder, than middle class salaried workers, and that they deserve higher wages.
Biden’s $15 federal plan isn’t the best way to give them those wages, but if state and local governments step in and set minimum wages proportionate to the local cost of living, minimum wage workers will be infinitely better off.
Grace Bechdol is Senior Communications & Social Media Editor. Email her at feedback@thegazelle.org.
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