$15 per hour brings benefits, consequences

The debate over raising the minimum wage is gaining steam, as lawmakers on both sides of the aisle weigh the benefits and consequences of boosting the lowest pay to $15 per hour. 

“We want to see Americans’ wages go up, we want to see more jobs created — not fewer — and we want to see businesses thrive, especially small businesses that are the backbone of our economy,” Rep. Dean Phillips, D-Minn., said Thursday during a hearing called by the House Committee on Small Business. 

Late last month, Democrats introduced the Raise the Wage Act of 2021, which would gradually increase the federal minimum wage from $7.25 to $15 by 2025. The legislation is currently included in the House version of the $1.9 trillion relief package that is set for a vote on Friday, but it’s unclear if that provision will pass the Senate. 

Another option, announced Tuesday by Senators Mitt Romney, R-Utah, and Tom Cotton, R-Ark., would be to increase the federal minimum wage to $10 per hour by 2025 and then automatically increase it every two years to match the rate of inflation. However, the bill also mandates that employers use e-verify to ensure that businesses are not hiring illegal immigrants. 

About 1.1 million hourly workers earned wages that were at or below the minimum wage last year, according to the Bureau of Labor Statistics. But there are many more millions of workers who earn just above minimum wage. 

Raising the federal minimum wage to $15 per hour would increase wages for 17 million U.S. workers, according to the Congressional Budget Office. Another 10 million additional workers earning slightly above $15 per hour would be affected. 

Meanwhile, the $10 increase proposed by Romney and Cotton would only boost wages for 4.9 million workers, or 3.2% of the workforce, according to a report released Thursday from the Economic Policy Institute.

There’s no doubt that companies across the world have been dramatically impacted by the Covid-19 pandemic, and that’s especially true of small businesses in the U.S. About 53% of companies with less than 50 employees surveyed reported the pandemic has had a moderate to severe impact on their business, according to the CBIZ Main Street Index.

In light of those struggles, some lawmakers feel now is not the time to raise operating costs for businesses. “A federal, nationwide mandate to raise the minimum wage to $15 per hour will put us right back to where we were months ago — American jobs destroyed, small businesses forced to close their doors and life savings gone to waste. I can’t think of anything more devastating at a time when our small businesses are barely getting back on their feet,” said Rep. Elizabeth Ann Van Duyne, R-TX.

Additionally, many opponents of the $15 minimum wage fear it will lead to job losses and business closures. The CBO report found that the federal minimum wage increase to $15 would reduce employment in the U.S. by 1.4 million, or about 0.9%. 

Yet proponents of the wage increase say that raising the federal minimum to $15 per hour will not only benefit workers, it will actually help small businesses by increasing consumer spending,…