Although President Joe Biden doesn't believe a $15 increase to the federal minimum wage will be in the final proposed Covid-19 relief package, the Congressional Budget Office finds that the pay hike would benefit 27 million Americans.
Late last month, House Representatives Bobby Scott (D-Va.), Pramila Jayapal (D-Wash.) and Stephanie Murphy (D-Fla.), as well as Senators Bernie Sanders (I-Vt.) and Patty Murray (D-Wash.), 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 was initially going to be included in the $1.9 billion relief package, but in recent days, Democrats have backed off their push. On Sunday, President Biden said the wage hike was unlikely to be included.
"I put it in, but I don't think it's going to survive," Biden told CBS' Norah O'Donnell in an interview Sunday. "My guess is it will not be in [the stimulus bill]." Biden did add that he would continue to push for a stand-alone bill.
Yet on Monday, the Congressional Budget Office released its analysis of the Raise the Wage Act of 2021, reporting that increasing the federal minimum wage to $15 per hour would affect 17 million workers who are currently making below that. Another 10 million additional workers earning slightly above $15 per hour would be affected.
Overall, the CBO found that the wage increase would reduce the number of Americans in poverty by 0.9 million workers, though the legislation would increase the cumulative budget deficit by $54 billion through 2031. The federal increase would also reduce employment in the U.S. by 1.4 million, or about 0.9%, according to the CBO.
Yet several experts argue that the CBO's findings overstate the reduction in jobs and the impact to the deficit.
"The bottom line is that I conservatively estimate that $15 federal minimum wage in 2025 and thereafter would have a positive, positive effect on the federal budget," says Michael Reich, UC Berkeley Professor of Economics and Co-Chair of the Center on Wage and Employment Dynamics at the Institute for Research on Labor and Employment (IRLE).
Reich, who has researched the impact of a higher federal minimum wage, said during a call with reporters Monday that there are many positive aspects to the wage hike on the U.S. fiscal outlook, including the fact that higher wages would increase consumer spending and bring in more taxes for federal programs like Medicare and Social Security.
Others expressed skepticism on the CBO's analysis of the potential for employment declines, saying the agency did not give appropriate weight to the highest-quality studies available on the impact of minimum wage increases on employment versus lower-quality research. "We have to be really skeptical of their assessment of the employment impact," says Heidi Shierholz, director of policy at the left-leaning Economic Policy Institute.
"It's really not a stretch to say that a new consensus has emerged among economists that minimum wage increases have raised wages without substantial job loss. And I think CBO assessment of the literature has just not caught up yet," Shierholz added.
Several advocacy groups have vowed to continue to push for the $15 minimum wage during Congress' budget reconciliation process toward the relief bill. "Essential workers who have been risking our lives on the frontlines of the pandemic for nearly a year can't survive on $7.25. We're literally dying while politicians are playing political football with our lives," says David Williams, a Detroit McDonald's worker and Fight for $15 leader, said in a statement.
"We need a $15 minimum wage in the Covid relief package," Williams says.