The $15 Federal Minimum Wage Wanted by Joe Biden Is Essential to Reduce Inequalities in America
The many advantages outweigh the few disadvantages.
Elected by the American people to become the 46th President of the United States, Joe Biden will lead a country more divided than ever when he officially takes office in the White House on January 21, 2021. Divisions in the United States are not new.
Long before the arrival of Donald Trump in American politics, the United States was already a divided country. Nevertheless, Donald Trump has continued to accentuate these divisions during his four years in office.
Donald Trump kept digging deeper and deeper into America’s divisions
Donald’s strategy was crystal clear from the very first days: divide and conquer. The more divided the United States became, the more Donald Trump maximized his chances of being re-elected for a second term in 2020.
Donald Trump, therefore, pursued an economic policy that benefited only the richest. The poorest suffered more than ever from the four years of Trump’s presidency. Millions of Americans therefore expect Joe Biden to work to reduce these inequalities during his presidential term.
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They will have to reconcile these two Americas more divided than ever before.
Joe Biden knows that the work ahead of him is immense. In his acceptance & victory speech, Joe Biden avoided any triumphalism. He sought to unite by telling Republicans that he wanted to work with them for the good of America.
Unfortunately, it is quite possible that these calls to the Republicans may not accomplish much. With a Senate that is expected to remain Republican, as we will be determined following the second round of the Georgia Senate election on January 5, 2021, Joe Biden will have a hard time getting his major economic reforms through.
Unless he decides to go forcibly through with Executive Orders.
Joe Biden’s economic reforms will aim to reduce inequality in the United States
At the heart of Joe Biden’s economic project are two major measures related to taxation. The first is to increase corporate taxes from 21% to 28%. This will remain below the level of taxation that existed before Donald Trump since it was 35% under the Obama era.
Second, Joe Biden wants to raise taxes for the richest individuals. Those earning more than $400K per year would see their taxes increase by 2% from 37% to 39%.
This is to finance Joe Biden’s policies to reduce inequality in the United States.
At the heart of inequality in the United States is the federal minimum wage, which is currently $7.25 per hour.
This wage has not been revalued since 2009. In most American states, this minimum wage represents an unbearable income since it is only $15K per year for someone working 40 hours a week.
Increasing the federal minimum wage to $15 per hour has been discussed for several years
Lawmakers, activists, and consumers have consistently called for an increase in the federal minimum wage for many years. In 2019, the U.S. House of Representatives passed a bill called “Raise the Minimum Wage Act” that would raise the federal minimum wage to $15 per hour by 2025.
Some U.S. states, such as Florida, California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, and New York have already committed to paying workers a minimum wage of $15 per hour in the coming years.
Joe Biden has included this idea in his platform for the 2020 presidential election.
Unfortunately for him, with a Senate that would remain Republican, it is likely that Mitch McConnell, the current Senate Majority Leader, will continue to refuse to bring this proposal before the Republican Senate.
To justify his refusal, Mitch McConnell explained this in July 2019:
“We don’t need to lose jobs. We don’t have enough jobs now.”
Mitch McConnell is against this reform, arguing that it would destroy jobs in the United States
At the time, the unemployment rate in the United States was 3.7%. If Mitch McConnell was talking about job loss here, it was because he was basing his comments on research from the Congressional Budget Office (CBO), a nonpartisan branch of government.
The CBO pointed out in a report that raising the minimum wage to $15 per hour by 2025 could cause 1.3 million workers to lose their jobs.
The Republicans, therefore, see only the short-term negative side of such a measure. Some Democrats also feel the same way, since there is nothing to say that if such a proposal were to be put forward in the Senate, it would be passed successfully.
This is confirmed by Heidi Shierholz, an economist at the Economic Policy Institute, a left-leaning think-tank based in Washington, D.C. :
“There is no path to having a filibuster-proof majority in the Senate to increase the federal minimum wage.”
An increase in the federal wage to $15 per hour would benefit nearly 20 million workers
Yet the CBO report also says that raising the minimum wage to $15 an hour by 2025 would have an extraordinarily positive effect on nearly 20 million workers:
“It would boost the wages of 17 million workers who would otherwise earn less than $15 per hour.”
Published in July 2019, this CBO report obviously does not take into account the disastrous consequences of the coronavirus pandemic on the American economy.
The U.S. Chamber of Commerce, a lobbying group for businesses says it is “strongly opposed” to this project of Joe Biden. Instead of a minimum wage increase of $15 per hour, the Chamber supports a more gradual increase of $10 per hour.
To justify this proposal, the Chamber says that “it would result in few if any, job losses.”
Some say it’s not the right time with the uncertainty around the coronavirus
Some opponents of this measure also say that it is not the right time to think about such a measure despite Joe Biden’s ambitions. The U.S. economy had recovered well from the first wave of the coronavirus pandemic as the unemployment rate, which had risen to 15% in April, fell to 6.9%.
However, the second wave of coronavirus is coming with all the uncertainty that it will cause on the American economy and therefore on the employment of American workers. Under these conditions, it would be better to wait until the American economy is fully out of the uncertainty of the coronavirus to discuss such a reform.
For Joe Biden, time is running out. Millions of American workers don’t even have enough money to live decently when they work 40 hours a week. It’s a totally unfair, unequal situation.
Supporting the middle class is essential. Joe Biden wants to reward work, not just wealth as he said at a meeting in June 2020:
“We need to build an economy that rewards work — not just wealth.”
Joe Biden wants to act now to reduce the racial wage gap
This increase in the federal minimum wage would reward the work of millions of American workers. It should also be seen as a way to reduce inequality in the United States.
Indeed, increasing the minimum wage has great implications in terms of race and gender. Such an increase would reduce the racial wage gap because people of color would benefit the most.
A Brookings Institution report from June 2020 showed that of the Americans who are essential to the functioning of the country, 4.3 million were earning less than $10 an hour. The term “essential worker” here refers to workers who were called to work while the majority of the economy was shut down to limit the spread of coronavirus.
In the same report, the Brookings Institution highlights the fact that 16% of essential workers are black and 21% are Hispanic. This is to be compared with other sectors where these figures are 10% and 15% respectively.
Increasing the federal minimum wage has more advantages than disadvantages in the long term
Raising the federal minimum wage is an obligation if Joe Biden really wants to reduce inequalities in the United States to reconcile the two Americas, which appear more divided than ever before.
Joe Biden also sees this project as a way to show America’s recognition to those workers on the front lines:
“Let’s not just praise them, let’s pay them — a decent wage, at least $15 per hour.”
Increasing the federal minimum wage to $15 per hour has some drawbacks. This is a fact.
However, the advantages clearly outweigh the disadvantages, and it is also something that would benefit the United States in the long run. Indeed, it is this type of measure aimed at reducing inequality that will allow the United States to remain the world’s leading economic power in the future.
It will therefore benefit all American citizens in the end. Let’s hope that Joe Biden will be able to implement such a reform during his presidency.