CBS tweeted the headline that Biden would raise the minimum wage to $15 per hour and lift 1 million people out of poverty. That would be great if it worked that way, but history proves that raising the minimum wage only hurts those it purports to help. According to the Pew Research Center, there are approximately 20.4 million workers over 18 earning at or barely more than minimum wage.
What the Congressional Budget Office Says Will Happen
Assuming Biden gets his way, the Congressional Budget Office says that raising the minimum wage to $15 per hour will put 1.3 million people out of work. Especially when many small businesses are struggling to stay afloat, raising minimum wages will slow down the economy. If Biden’s logic holds, it would logically follow that one should raise minimum wages to $50 per hour and eliminate poverty in America.
Reduce Business Income
The Congressional Budget Office also warns that if the legislation passes, business income will decline. This action makes logical sense because payroll is already one of the largest expenses faced by most companies.
The office also says that almost doubling the minimum wage from its current $7.25 per hour to $15 would skyrocket inflation. Businesses who managed to keep their doors open would have to sell their products at a higher rate to stay in business. The U.S. economy is expected to be slow throughout 2021 because of the pandemic’s effects, with many people barely managing to pay their bills.
A change would hit some industries particularly hard. For example, the hospitality industry has the largest number of employees working at or near minimum wage. Yet, restaurant profit margins are often around 5% in many locations.
Raising the minimum wage right now would be deadly to an economy that is already struggling.