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America needs a higher federal minimum wage

The threat of job losses is not substantial enough to outweigh the benefits: lifting millions of people out of poverty and ultimately reducing income inequality.

House Democrats Hold Press Conference Before “Raise The Wage Act” Vote
An activist wears a “Fight For $15” T-shirt in 2019 at a news conference prior to a vote on a minimum wage bill.
Alex Wong/Getty Images

There is no question that America’s lowest-wage workers need an increase in the miserly federal minimum wage, something that’s now part of the Biden administration’s federal stimulus package.

It’s still unclear whether Democrats, in the face of Republican opposition, can include the increase as part of the $1.9 trillion stimulus.

But they should forge ahead, remembering that 29 states, Illinois among them, have already raised their minimum wage above $7.25 an hour, the federal standard that remains unchanged since 2009.

It’s time for the nation as a whole to do so, helping to make life a little easier for millions of working folks, a substantial number of whom are essential and front-line workers.

Polls show two-thirds or more of Americans support a $15-an-hour wage across party lines. Politicians should remember that when it’s time to vote on the idea.

What FDR said

The current Raise the Wage Act would increase the federal minimum wage incrementally each year, to $15 an hour by 2025.

Conservatives and business leaders have been quick to wave the red flag over potential job losses, and they got some ammunition recently from the cautious Congressional Budget Office. In a new report, the CBO estimated that 1.4 million jobs would be lost under the proposed bill.

We can understand the concern of small business owners, which is why a phased approach makes sense. Give businesses time to adjust to the new reality.

But as economist Heidi Shierholz of the progressive Economic Policy Institute pointed out to us, most economists now believe that a higher minimum wage does not lead to substantial and widespread job losses.

“That’s become a gospel that simply isn’t true,” Shierholz says.

Even the CBO points out the substantial benefits: Up to 27 million workers would receive higher wages and pay more in taxes, raising government revenue. Federal spending on SNAP food stamp benefits and similar programs would decline.

Higher wages also lower employee turnover, Shierholz says, and that benefits businesses. “It reduces the chaos in people’s lives,” she says. “If their car breaks down, they don’t have to leave their job that requires a car to get there. They can afford to fix their car.”

Remember what President Franklin D. Roosevelt said the night before he signed a bill in 1938 authorizing the first federal minimum wage — 25 cents an hour.

”Do not let any calamity-howling executive with an income of $1,000 a day,” FDR said, “tell you . . . that a wage of $11 a week is going to have a disastrous effect on all American industry.”

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