CNBC is reporting today that President Biden will issue an executive order to raise the minimum pay for federal contract workers to $15 an hour by March of next year. The current minimum is $10.95. Future increases will be tied to inflation. (Has it occurred to him that such a rapid increase in wages will fuel inflation?
The article reports:
President Joe Biden on Tuesday will continue his push for a national $15 minimum wage with an executive order that raises pay to at least that level for hundreds of thousands of federal contract workers, according to senior White House officials.
The move will increase the current minimum wage of $10.95 by nearly 37% by March of next year and continue to tie future increases to inflation.
It will apply to federal workers from cleaning and maintenance staff to food service contractors and laborers, sweeping in tipped workers who were previously left out of the last increase under former President Barack Obama.
White House officials insist it won’t increase costs for taxpayers because of benefits including increased worker productivity.
Biden has expressed his belief that strong unions and higher wages can resurrect America’s middle class while helping bridge economic and racial inequities, and the executive order is his latest step in support of the organized labor movement.
So what happens when the minimum wage is raised? First of all, it provides a bargaining chip for unions in their wage negotiations. This creates higher wages across the board which leads to inflation. There is no evidenced that increasing wages increases worker productivity. The people who will actually be financially impacted by this move in a negative way are senior citizens and those in the middle and lower economic classes–the inflation that will follow will be much more difficult to manage for those two groups than for the wealthy.
Getting a significant wage increase is useless if the price of everything you need also increases significantly.