Topline
As Democrats push forward this week in crafting Biden’s $1.9 trillion stimulus plan, new analysis from investment giant Goldman Sachs finds that a $15 per hour minimum wage—a major priority for Biden and Democrats that is looking increasingly unlikely to make the final cut of the legislation—would benefit nearly a third of American workers.
A Publix supermarket cashier in Miami Beach, FL on May 27, 2020.
Key Facts
Goldman Sachs’ analysts estimate that hiking the federal minimum wage to $15 per hour would affect some 30% of workers, more than half of which would be adults with family incomes of less than $50,000 per year.
That said, the researchers note that because a boost to $15 would be so much larger than more common incremental wage hikes, the risk that a higher minimum wage would reduce employment for low-income workers is difficult to quantify.
A report released Monday by the Congressional Budget Office found that the $15 per hour hike would cost 1.4 million jobs but lift 900,000 workers out of poverty.
The $15 hike would contribute to wage growth and rising inflation, Goldman’s analysts said but only minimally.
Key Background
As part of his $1.9 trillion American Rescue Plan, Biden has proposed raising the national minimum wage from $7.25 per hour to $15 per hour over the next five years. The plan has the support of progressive Democrats, some of whom have even called for a larger bump. Goldman’s analysts say they believe the chances of a $15 minimum wage making it into law are low, noting that the last three times Congress raised the minimum wage (in 2007, 1996, and 1989) was under divided governments with recessions far in the past—very different from the political and economic circumstances of 2021. If lawmakers can compromise and a minimum wage increase does pass, it’s more likely that it will be closer to $10 or $11 per hour, the analysts said.
Big Number
17 million. That’s how many workers, whose wages would otherwise fall below $15 per hour, would be directly affected by Biden’s plan in an average week in 2025, the CBO said Monday.
What We Don’t Know
It’s not yet clear whether Senate rules will allow Democrats to include the $15 minimum wage provision in the stimulus package they will craft this month. The legislation is being written under special budget reconciliation rules so that it can pass with only a simple majority of Senators voting in favor, but that means that every provision must have some effect on the federal budget. It’s possible that the $15 minimum wage push won’t meet that criteria. Last week, President Biden told CBS he doesn’t believe the hike will make it into the final bill. Sen. Bernie Sanders (I-Vt.) told CNN that a “room full of lawyers” is working to make the case that a $15 minimum wage will have “significant budget implications and, in fact, should be consistent with reconciliation rules.” The CBO said Monday that Biden’s proposal would increase the cumulative federal budget deficit by $54 billion over the next ten years.
Further Reading
Biden Predicts $15 Minimum Wage Won’t Be In Relief Bill But Vows To Make Separate Push (Forbes)
How Would A Minimum Wage Hike Affect Older Americans? And Will The ‘Experts’ Get It Right? (Forbes)
Manchin Doubles Down On Call For Bipartisan Stimulus: We’re Not Going To ‘Shove It Down People’s Throats’ (Forbes)
Democrats Push For $50K Student Loan Forgiveness—Here’s Where The Resolution Stands (Forbes)
