The fight for $15: can Biden usher in a higher minimum wage?


Mendy Hughes, a Walmart worker from Melbourne, Arkansas, earns $11.62 an hour, a wage so low that she is forced to live off baked potatoes and TV dinners. Sometimes, she skips meals altogether to save money.

“I can hardly get by,” said Ms Hughes, 46, a single mother of one who has worked for the retailer for more than a decade. “I can’t afford to buy groceries. I can’t afford to pay my bills.”

Ms Hughes is one of an estimated 32m people living in the US who earns less than $15 an hour, many of whom are relying on the new president to raise their pay.

Since taking office, Mr Biden has made a concerted push to increase the federal minimum wage, which has been stuck at $7.25 an hour since 2009. His $1.9tn economic stimulus package includes a provision to roughly double it to $15 over time.

The president’s efforts have enthused those on the progressive left, who have long allied themselves with the “fight for $15”, while unnerving businesses and triggering opposition from Republicans.

Tying the minimum wage to the fiscal stimulus package fulfils one of the key pledges Mr Biden made during last year’s election campaign, when he courted support from labour unions and low-paid workers.

But it also risks complicating the quick passage of his stimulus bill. While Republican lawmakers are asking him to drop the minimum wage increase from the plan, many Democrats, particularly on the left, are doubling down on its inclusion.

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“We can no longer tolerate millions of workers not being able to afford to feed their families or pay the rent. The time for talk is over. No more excuses,” Bernie Sanders, the US senator from Vermont, told reporters this week.

Bharat Ramamurti, the deputy director of the National Economic Council at the White House, told the Financial Times that Mr Biden viewed a higher minimum wage as a “moral issue” that had become more pressing during the pandemic.

Many of those earning the lowest wages have been classified as essential workers, meaning they must keep reporting for work despite the heightened risk of catching the virus.

“His view is nobody . . . should work 40 hours a week and live in poverty,” said Mr Ramamurti. “It’s a way of compensating [essential workers] for the risks that they have taken on and will continue to take on while this pandemic is happening.”

Map of minimum wage rate by state. Several US states are using the federal minimum wage, which has been $7.25 per hour since 2009.

Mr Biden’s push for higher pay reflects a shifting consensus among economists over the impact of wage increases. Decades ago it was widely believed that more generous salaries would trigger a spike in unemployment, but that conclusion is now less pervasive.

“There was originally a lot of concern that . . . some people would benefit but a lot of people would lose their jobs,” said Molly Kinder, a fellow at the Brookings Institution in Washington. “Now the dominant accepted wisdom among economists is that those concerns are overblown.”

Jason Furman, an economist at Harvard University who chaired Barack Obama’s council of economic advisers, said that quickly raising the minimum wage in a weak labour market would be problematic, but that a gradual increase was less risky.

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“I think most of this . . . will take place after the economy should have sufficient demand and sufficient spending,” he said.

Supporters of a minimum wage rise say it will bring economic benefits, including an expansion of disposable income for consumers with a high propensity to spend, less pressure on the government safety net and a narrowing of racial economic disparities.

A growing number of cities and states — most recently conservative-leaning Florida — have approved minimum wage increases, in a sign of increasingly broad public support for the measure, especially during the pandemic.

But despite the shift in economic and public opinion, most Republicans remain opposed to the proposal. Their chief concern is that while large companies might be able to absorb higher wages, small businesses, already teetering during the pandemic, will suffer.

Rick Scott, the Republican senator from Florida, last week said a minimum-wage increase could “kill our small businesses”. The National Restaurant Association said the current debate was “not a good news conversation” for an “industry in a state of economic freefall”.

Most political pundits think Mr Biden will struggle to pass minimum wage legislation in the near term, but there are still steps the president can take to boost pay.

For instance, he has directed his administration to prepare an executive order that would force federal contractors to pay $15 an hour if they want to keep doing business with the government.

Mr Ramamurti from the NEC insists the president is not about to give up the fight. He argues that a wage increase is one of the best ways of fulfilling demands from Republicans and some Democrats that the next round of fiscal support is “targeted” at those who need it most.

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“It doesn’t get more targeted than the minimum wage. These are by definition, low-income folks . . . who are working and absorbing risks every day by working during a pandemic,” he said.

Precious Cole, an activist for Fight for $15, the campaign group who earns $12 an hour at a Wendy’s restaurant in Durham, North Carolina, is among those hoping that Mr Biden succeeds. The 33-year-old has had to take on a second fast-food job to tackle mounting credit card debts and help care for her elderly mother.

“You call us essential workers, but you’ve got to start paying us like essential workers,” she said.

Additional reporting by Courtney Weaver in Washington



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