President Joe Biden proposed raising the minimum wage to $15 but the Congressional Budget Office (CBO) analyzed that this could lead to losing up to 3.7M million jobs.
The Washington Examiner reported Tuesday that Biden's $1.9 trillion coronavirus relief package includes increasing the minimum wage from $7.25 to $15 but the CBO argued that the move "could be offset by higher rates of joblessness."
The report said that "1.3 million workers who would typically be employed would be without jobs in an average week in 2025. A new federal minimum wage would also increase the pay of 17 million workers in an average week in 2025."
Low-income families would enjoy the raise in wages but higher-income families would suffer loss of business. Below the poverty line families would gain an additional income of $8 billion while those above the poverty line would lose an income of $16 billion.
"No one working 40 hours a week should still be below the poverty line. People tell me that's going to be hard to pass. Florida just passed it, as divided as that state is, they just passed it. The rest of the country is ready to move as well," Biden stated.
The proposal was opposed by some Republicans, The Hill noted. Senator Tim Scott said that the new federal minimum wage would destroy the struggling small businesses and "would force those that survive to lay-off employees."
Senator Pat Toomey also said that, "If the federal government mandates a universal $15 minimum wage, many low-income Americans will lose their current jobs and find fewer job opportunities in the future."
Quartz reported that the U.S. House of Representatives has already passed a bill in 2019 to raise the federal minimum wage to $15 by 2025 but it was refused to be taken up by the Senate which was controlled by the Republicans. The bill was reportedly blocked by Republican Party's Senate leader, Mitch McConnell.
The report further said that Walmart CEO Doug McMillon opposes the proposed wage hike but supports raising the current federal minimum wage, saying that small businesses and geographical differences should be taken into account in wage increases. Walmart has raised its minimum pay but is still lower than Target and Amazon which pay their U.S. employees with $15 minimum wages.
According to Bloomberg, economists have long been debating the issue of higher minimum wage, saying that it would make more expensive for employers to hire workers and thus would hinder creation of jobs. However, this perspective raises questions since some cities and states have already increased the hourly minimum wage to $15 but labor markets appeared unaffected.
There has not been an increase in federal minimum wage since 2009 and that U.S. workers have had their wages increased but "at a much slower pace than their output per hour." Like other industries in recent years, a nationwide strike is being planned by the fast-food workers to demand a $15 minimum wage.
Biden's wage proposal "would scrap separate minimum-wage thresholds that apply to workers who receive tips, and to people with disabilities," the report said.