The U.S. House of Representatives approved an amended version of the Raise the Wage Act of 2019. This would increase the federal minimum wages gradually to $15 per hour by 2025. The federal minimum wage currently stands at $7.25 an hour. It has not increased in the past nine years.
However, the bill was killed in the Senate because the Senate Committee on Health, Education, Labor and Pensions refused to vote on it (or discuss any increase in minimum wage). The debate over whether to raise the minimum wage continues.
A federal minimum wage of $15 per hour may be closer to reality if Joe Biden wins the 2020 presidential election. It is part of his policy agenda. There are pros and cons to the discussion about the federal minimum wage increase.
The federal minimum wage would be increased to $15 per hour, which would increase the standard of living for minimum wage workers. They would be able to afford rent, car payments and other household expenses more easily. Robert Scott, the chairman of the House Committee on Education and Labor stated that a full-time worker can’t afford a modest two-bedroom apartment in any U.S. county. Senator Bernie Sanders also believes the minimum wage should be $15.
A second benefit of raising the minimum wage, which is less obvious, is an increase in employee morale. Happier employees will not only result in a more cohesive and productive workforce but could also lead to higher customer satisfaction. Employees who are happy with their jobs and their wages are less likely to leave. This reduces employer’s training and hiring costs.
Proponents claim that raising the minimum wage to $15 will also benefit women and minority workers. A $15 minimum wage would provide 31 percent of African Americans with a increase and 26 percent for Latinos. A disproportional amount of minority workers live in states with minimum wages of $7.25 per hour.
One of the drawbacks to increasing the minimum wage is that businesses may increase their prices , which could lead to inflation.
Opponents claim that increasing the minimum wage will likely lead to wages and salaries rising across the board. This would cause substantial operating costs for companies, which would then drive up the prices of their products and services in order to pay these increased labor costs.
Price increases mean an increase in living costs, which could negate any benefits workers may have from having more money in their pockets.
A higher minimum wage could lead to job losses. Many business executives and economists agree that labor is a significant cost to do business. They argue that businesses will have to reduce employment to maintain profitability.
According to the 2019 CBO report, 1.3 million jobs would be lost if the minimum wage was raised to $15 per hour by 2025. These numbers could rise substantially if more companies moved to outsourcing more work to cheaper labor markets.
A potential negative effect that may not be immediately obvious is the possibility of a higher minimum wages resulting in greater labor market competition for jobs at minimum wage.
An increased minimum wage could lead to a lot of overqualified workers filling minimum wage positions that would normally go to inexperienced or young workers. This could make it difficult for younger and less experienced workers to get work and gain experience that will help them move up the career ladder.
The bottom line
There are many factors to consider when raising the minimum wage. It would give many workers a higher income and a better standard of living, but there are important economic factors that must be considered. Economic conservatives are concerned about the potential increase in inflation and unemployment. They also worry that it will cause more problems.
Many lawmakers have set a goal to raise the federal minimum wage from $15 an hour to $15. Although increasing the minimum wage will likely lift people out of poverty and improve their work ethic, there are potential negative consequences such as inflation or loss of employment.
We are certain to see some action on this matter in the near future, regardless of what happens. Over a decade has passed since the last federal minimum wage hike. The movement for a higher minimum wages has grown momentum over the years and strengthened in recent years. We will have to wait and see the future for minimum wage workers in America.