Over the past several weeks, the Biden administration has laid out the first pieces of its new agenda for the American people, including the promise of a $15 federal minimum wage.
This is one of many proposals taken from the “California model,” and it has noble intentions – to address income inequality and make sure that no American working 40 hours a week lives below the poverty line.
Unfortunately, by increasing the federal minimum wage, President Biden is attempting to address the symptom of income inequality rather than the cause, which would ultimately ensure that many Americans in low-income jobs are no longer able to work at all.
Economists are clear that income inequality is the result of a multitude of factors: globalization, technological advancement, the efficient employment of capital, and changing institutions, to name a few. Attempting to address income inequality without taking on these root issues is the equivalent of putting a Band-Aid on a bullet wound.
The Congressional Budget Office recently concluded that raising the minimum wage to $15 will cause 1.4 million Americans to lose their jobs in the next several years. That is substantially more than the number of people that would be lifted out of poverty by this well-intentioned but ill-considered policy. For these workers, the real minimum wage will be zero.
In California, where a $15 minimum wage is already in place, we are on track to lose 400,000 jobs by 2022, according to the Employment Policies Institute. A federal increase in minimum wage of this size would result in a similar flight of jobs to other countries or the elimination of jobs altogether due to automation.
At a time when our national unemployment has only just begun to recover from the economic pain of COVID-19 lockdowns, jeopardizing our recovery and eliminating American jobs is an unacceptable outcome. According to the CBO analysis, many of the Americans left unemployed by the pandemic would simply see their jobs never return.
Beyond this, every state is unique. California on average has a 38% higher cost of living than the average American city. Average home prices in Los Angeles are over $800,000 while the median home cost in Des Moines is just $173,000. Similarly, a $15 per hour wage in Mississippi would be the equivalent of making $35.74 per hour in Washington, D.C.
Raising the minimum wage is certainly not a new idea nor is it unique to the COVID-19 pandemic, and it should not be treated as such.
A one-size-fits-all federal policy cannot support our communities as well as the locally tailored approach we already use. It is worth noting that 29 states already have minimum wages higher than the federal floor of $7.25, with nine of those reaching a $15 minimum under state law in the coming years.
What is further concerning about President Biden’s proposal is that it…
Go to the news source: Rep. Jay Obernolte: If Biden’s $15 minimum wage happens, for 1.4 million America…