Warning: Biden would boost pay but blow up small business
Thursday, January 21, 2021
Chris Woodward, Billy Davis (OneNewsNow.com)
President Joe Biden will urge the Democrat-controlled Congress to more than double the federal minimum wage to $15 an hour, a push that is alarming some economists and lawmakers, and small business owners already struggling during the pandemic.
The current minimum wage is $7.25, which has remained unchanged for more than a decade since it was bumped up in July of 2009.
According to CNBC, the business news outlet, Biden is including the $15-per-hour push in the America Rescue Plan, the $1.9 trillion aid package that promises to address the COVID-19 pandemic.
Merrill Matthews, resident scholar at the Texas-based Institute for Policy Innovation, calls it “amazing” to witness the Biden administration demand doubling the minimum wage in the same aid package promising to help small businesses survive.
"If [Biden] gets the $15 an hour he's pushing,” Matthews warns, “a lot more businesses will shut down because of that, especially in certain states.”
Since the China-based virus hit the U.S. a year ago, some economists and business journalists have observed Yelp, the business review service, for information on businesses forced to shutter. Yelp’s review of Seattle businesses, for example, found 3,016 have closed their doors, KOMO, an ABC News affiliate, reported in early January.
In a six-month period from spring to summer last year, approximately 160,000 businesses across the country closed their doors, which averages 800 daily, Yelp reported.
In a fall report, Yelp estimated 60 percent of businesses would not reopen.
For businesses still struggling to remain open, Merrill questions what Biden and Congress think will happen if those worried owners are forced to pay more salaries to their employees.
"How does forcing businesses to have to pay more in salaries actually help businesses stay open, especially small businesses?" he asks.
But supporters of raising the minimum wage appear to be more focused on the workers, not the bosses who pay them.
"They're going to buy groceries. They're going to buy clothes. They're going to buy things they need," U.S. Rep. Steny Hoyer (D-Maryland) said in 2019 after the House passed the Raise the Minimum Wage Act, which would have raised the minimum wage incrementally to $15 an hour in 2025.
The bill was stopped by then-Senate Majority Leader Mitch McConnell (R-KY), who is now part of a 50-50 split in the Senate.
According to the CNBC story, Florida has joined other states in passing a law to raise the minimum wage to $15 an hour. Those states are California, Connecticut, Illinois, Maryland, Massachusetts, and New York.
Wal-Mart, the mega-retailer and the biggest employer in the U.S., announced last year it was increasing pay for its lowest-paid positions in its delis and bakeries from $11 to $15, and boosting pay in its auto care centers by $1 an hour. Store employees with leadership responsibilities already start at $18 to $21, the company said.
Two years ago, economist Ben Zipperer at Economic Policy Institute told lawmakers that raising the wage to $15 by 2024 would benefit workers, businesses, and the economy.
"By raising the federal minimum wage to $15 by 2024,” he said, “we will finally deliver a much-needed boost in wage income and increase the value of the minimum wage to a level that ensures the lowest wages we pay workers are not poverty wages.”
Zipperer also urged Congress to phase out the lower-wage system in which tipped workers, typically working tables and serving drinks in restaurants and bars, are paid $2 or $3 hourly and rely on customers’ generosity to make ends meet.
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Considering the strain the pandemic has already put on businesses, an economist does not think House and Senate Democrats should have introduced legislation to raise the federal minimum wage to $15 an hour by the year 2025.
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