Double the minimum wage to lift millions of Americans out of poverty. Joe Biden’s ambitious proposal, already on the desk of lawmakers, could prove to be a social revolution for the poorest in the United States, a country with glaring socio-economic disparities.
“Even before the pandemic, the federal minimum wage of $ 7.25 was economically and morally indefensible,” Virginia Democrat Bobby Scott summed up as he introduced the bill.
This has not changed one iota since July 24, 2009.
Although very popular among the population – even in the ranks of Republican partisans – and supported for more than a decade by the unions, the initiative has come up against opposition from Republicans under pressure from corporate lobbies who refuse to pay costs. additional.
“Not a radical ideal”
“This is not a radical ideal,” assured Bernie Sanders, a former progressive presidential candidate, calling the $ 7.25 “starvation wages”.
“In the richest country in the world, when you work 40 hours a week, you should not live in poverty,” insisted the senator from Vermont who is carrying the project and hopes to convince the skeptics.
The economic slump caused by the pandemic mainly affects small businesses, especially in the restaurant sector. They therefore do not look favorably on this proposal included in the gigantic bailout plan of 1.9 trillion dollars.
The vice-president of the National Federation of Restaurants (NRA) Sean Kennedy thus freshly welcomed the project, especially since he understands the obligation to pay this minimum wage in full, regardless of tips imposed on customers. These allow bosses to pay employees only two or three dollars when these famous “tips” fill the gap with the 7.25 dollars.
This measure “will entail insurmountable costs” for many establishments which will have no choice but to lay off more or to close permanently, predicts Mr. Kennedy.
New Treasury Secretary Janet Yellen retorts that “raising the minimum wage will lift tens of millions of Americans out of poverty while creating opportunities for countless small businesses across the country.”
It all depends on how it will be implemented, she argued, noting a gradual increase – $ 15 by 2025 – giving “enough time to adapt”.
Good or bad for the economy? The debate has been raging for ages within economists and has not been resolved, especially since the economic reality is not the same as we work in New York (many opportunities, high cost of living … ) or in Mississippi (less dense economic fabric, much cheaper life …).
Virtuous circle?
But the Biden administration highlights the virtuous circle: Paying those with the lowest wages would drive billions of dollars in additional consumer spending on goods and services provided … by small businesses.
In 2019, 1.6 million workers had wages at or below the federal minimum, or 1.9% of all workers paid by the hour, according to the Bureau of Statistics.
A small number because the minimum wage, introduced in 1938 by Franklin Roosevelt during the Great Depression, has over time become theoretical.
If the southern and central states generally apply the minimum wage, those of the east and wealthy California have set a much higher rate: 12, 13 or even 15 dollars.
And, large companies including Amazon and Starbucks are already charging a $ 15 salary to attract labor.
The salary of Maggie Breshears, employee of the Fred Meyer group in Seattle, thus amounts to 17.59 dollars against 10 dollars in 2013.
“When you can provide someone with a job, you have to pay them a living wage,” she opines.
Passage in force?
An hourly rate of $ 15 by 2025 would increase the wages of 27.3 million people and lift 1.3 million families out of poverty, the Congressional Budget Office calculated. But he also estimates that this could cause the loss of 1.3 million jobs.
For Gregory Daco, chief economist at Oxford Economics, beyond the potential impact, the proposal illustrates the social shift desired by Joe Biden.
This “confirms the will of an administration to focus more on social and racial inequalities which had led to strong tensions last year,” he underlines.
The proposal will be difficult to pass even if Democrats dominate both houses.
Bernie Sanders has already mentioned the use of a device to ratify the law by a simple majority.