The election of Joe Biden as the 46th President of the United States has brought about a significant shift in the nation’s political landscape, particularly when it comes to progressive policies. One cornerstone of his campaign was a proposal to raise the federal minimum wage from its current rate of $7.25 an hour to $15 an hour by 2025. The Biden Administration has made it known that increasing the minimum wage is a priority, and they have committed to signing legislation that will bring this proposal to fruition. However, there are numerous considerations that must be taken into account before this is implemented, including its potential impact on businesses, employees, and the economy as a whole. In this article, we will discuss Biden’s plans to raise the federal minimum wage, the potential benefits and drawbacks of such a change, and further considerations related to the topic.
Overview of Biden’s Proposal
As part of his campaign promises, Joe Biden has proposed increasing the federal minimum wage from its current rate of $7.25 an hour to a rate of $15 an hour by 2025. Biden has also promised to gradually raise the wage in the interim, starting in 2021, from its current rate of $7.25 an hour and culminating with the final rate of $15 an hour. This progressive increase in the federal minimum wage could provide an estimated minimum wage lift of over $5,100 to workers in the year 2025 who are currently making the federal minimum wage.
The potential benefits of this significant increase to the minimum wage include an overall boost to the economy, as well as an increase in the wages of lower-paid, and often vulnerable, workers. The proposed changes to minimum wage, if passed into law, could be a significant help to those who are part of the working poor, and also to those who are living in poverty, as the additional money could provide a much-needed boost to their incomes. In addition, the increased wages would likely lead to more spending power for both families and individuals, potentially boosting the economies of local businesses and communities as a whole.
Potential Benefits of Raising the Federal Minimum Wage
The primary benefit of raising the federal minimum wage would be the potential increase in wages for lower-paid workers. This increase in wages could potentially reduce the number of people in poverty, and help lift more households out of poverty, particularly those with children, who are often the most affected by the economic impact of poverty. According to studies undertaken in the Unites States, approximately three million people could be lifted out of poverty, while an additional five million could potentially out of poverty with even a slight increase in the minimum wage.
In addition, raising the minimum wage could also potentially improve working conditions, particularly for lower-paid workers. By providing a greater amount of income, workers are likely to have greater job security, as employers will be more likely to continue employing them, despite the potential cost. This job security could then lead to less job turnover and increased worker stability, which would overall be beneficial for both businesses and the economy.
A raise in the minimum wage would also likely have a positive knock-on effect for middle-income earners, as well as those earning slightly more than the current minimum wage, as businesses may respond to the increased wages by gradually raising salaries higher than the minimum wage in order to retain and attract high-skilled workers. This could result in higher wages and salaries being paid to individuals along the full pay spectrum, potentially leading to more economic stability, more economic equity, and a higher standard of living for many households.
Potential Drawbacks of Raising the Federal Minimum Wage
While there may be potential benefits to raising the federal minimum wage, there are also potential drawbacks. One concern is that it could potentially result in job losses, particularly for small businesses who may not be able to afford the increase in wages, as well as for workers who may be displaced in favor of more highly-skilled workers. This could then lead to increased unemployment, particularly amongst those on the lowest rungs of the economic ladder.
In addition, the potential increase in wages could also lead to an increase in the cost of goods and services. This could lead to a drop in consumer spending, as wages may not be able to keep up with the increased prices of goods and services, resulting in a decrease in consumer demand for those goods and services, which could lead to businesses cutting back on hiring or closing down as a result.
The Debate on the Federal Minimum Wage
The current debate over raising the federal minimum wage is based upon the potential benefits and drawbacks that could potentially come from such a change. Supporters of the proposal believe that raising the federal minimum wage could provide a much-needed boost to those on the lowest rungs of the economic ladder, which could lead to overall economic benefits and increased economic equality.
On the other hand, opponents of the proposal argue that it could lead to job losses and an increase in the cost of goods and services, with no guarantee that wages would keep up with the increases of prices. They argue that such a change in policy could lead to more economic instability, and potentially undo any progress made towards economic equality.
Recent Developments
Although President Joe Biden has proposed raising the federal minimum wage to $15 an hour, he has been unable to pass the needed legislation to do so. So far, there have been unsuccessful attempts to pass the Raise the Wage Act of 2021, which would increase the minimum wage to $15 an hour by 2025. This legislation has been blocked by Republican senators, who argue that it will lead to job losses and an increase in the cost of goods and services.
In light of this, there has been a rise in the number of states taking it upon themselves to increase their own minimum wage, usually to a rate higher than the federal minimum wage. Currently, there are 29 states and the District of Columbia whose minimum wage is higher than the federal minimum wage. These states have seemingly moved forward on the issue in lieu of federal action, although this could lead to an even greater difference between the wages of different states which could lead to further economic inequality.
Final Thought
Raising the federal minimum wage has been a long-held progressive policy position, and one that has become a priority for the Biden Administration. While there are potential benefits to raising the federal minimum wage, such as an increase in the wages of lower-paid workers and the potential lift of three million people out of poverty, there are also potential drawbacks, such as job losses, an increase in the cost of goods and services, and further economic inequality.
In the current political climate, it will likely be difficult for President Biden to pass the needed legislation to raise the federal minimum wage. In the meantime, it appears that states are taking it upon themselves to increase their own minimum wage rates, which could lead to greater economic equality on a state level, but could also lead to further economic inequality on a federal level.
Ultimately, this is an important debate and one that is worth further consideration. Whether the Biden Administration will be successful in their attempts to pass the needed legislation, or whether this is an issue that will have to be decided on a state level, it is clear that this is an issue that must be addressed in order to ensure a fairer and more equitable economy for all.
The issue of raising the federal minimum wage is an important one, and one that carries a number of potential benefits and drawbacks, both to individuals and businesses. No matter the outcome, it is clear that this is an issue that is worth further consideration, as addressing it could have far-reaching implications for the economy, for people’s wages, and for economic equality.
