Millions of Americans are anxiously waiting to see how a proposal to raise the federal minimum wage plays out in the coming weeks or months.
Three days ago, U.S. House Speaker Nancy Pelosi, D-Calif., said the wage hike will be in the final version of the COVID relief bill that the House sends to the U.S. Senate for a vote. Her comment comes after President Joe Biden on Feb. 5 admitted publicly that the wage hike may be a tough sell to be included in the aggressive $1.9T American Rescue Plan bill he has been touting since Inauguration Day.
At the same time, groups such as The Poor People’s Campaign, have jumped out to support the wage hike, while small business owners wait on the sidelines wondering how they are going to survive if such a bill is signed into law because a minimum wage hike automatically means their costs go up from day one of its passage.
We believe and support higher wages for everyone, however, we believe the minimum wage hike bill should be debated separately from Biden’s American Rescue Plan so each and every side can weigh in and fully understand the long-term impacts.
The good news, as proposed, the hike would not automatically be a jump from $7.25 an hour to $15 an hour all at once. One minimum wage hike bill, the Raise the Wage Act of 2021, calls for a phased-in increase, in annual increments, to $15 an hour by June 2025.
The nonpartisan Congressional Budget Office has published a 17-page report analyzing the impact that raising the minimum wage would have on the U.S. economy. Its study was conducted using the same “conventional approach to estimating the costs of legislation,” states the report. One of the first impacts the study cited was a price increase in goods and services across the board.
“Higher prices for goods and services — stemming from the higher wages of workers paid at or near the minimum wage, such as those providing long-term health care—would contribute to increases in federal spending.”
The CBO study also estimates that the cost of providing unemployment compensation would increase with a minimum wage hike, however, there would be a drop in federal welfare programs, such as SNAP.
“Changes in employment and in the distribution of income would increase spending for some programs (such as unemployment compensation), reduce spending for others (such as nutrition programs), and boost federal revenues (on net),” states the CBO report.
In the mix of the minimum wage debate is the discussion about stimulus checks for individuals as proposed in the American Rescue Plan.
As we’ve stated before, not every American needs a stimulus check. For families that have not been financially disrupted due to COVID, Congress needs to find a better way to distribute any type of federal stimulus that may be coming down the pike. We urge lawmakers to be efficient and save those funds for folks who are truly hurting and help them instead.
Perhaps one solution would be to base any stimulus check on the individual’s 2020 Tax Return, not their 2019, which was how the first checks were distributed.
In both cases — the minimum wage and the stimulus, we urge lawmakers to get it right and consider the long-term impact on families and the economy.