So far the Biden administration has not been kind to American workers. If you work in the energy sector of the economy, you are in danger of losing your job–if you haven’t lost it already. Now there is another policy idea that will increase unemployment in America.
CNBC reported the following yesterday:
Raising the federal minimum wage to $15 an hour, as President Joe Biden has proposed, would cost 1.4 million jobs over the next four years while lifting 900,000 people out of poverty, according to a Congressional Budget Office report Monday.
The impact on the employment rolls is slightly higher than the 1.3 million employment estimate from a 2019 report from the CBO, a nonpartisan agency that provides budgetary analysis to Congress.
The number has been disputed by employment advocates who cite the benefits from the raise and say businesses will be able to handle the costs.
Biden has acknowledged that the plan to phase in the new federal wage floor likely won’t make it through the $1.9 trillion spending plan he is pushing through Congress, though he remains committed to the increase.
The CBO report estimates that the employment reduction would happen by 2025 and come as employers cut payroll to compensate for the increased costs.
Along with the reduction in employment, the federal budget deficit would increase by $54 billion over the next 10 years, a fairly negligible level considering the fiscal 2020 shortfall totaled more than $3 trillion.
There are a few facts being left out in this discussion. The minimum wage exists to allow new unskilled workers to enter the workplace. It exists for high school students looking for part-time jobs. It allows new unskilled workers to learn some basic skills that are applicable in any job–showing up on time, dressing appropriately, being reliable, taking responsibility, etc. Jobs that pay the minimum wage are not supposed to be career jobs–the people in those jobs are expected to increase their marketable skills and move up the employment ladder. Raising the minimum wage will result in a lot of high school students not being able to get jobs and learn the skills they need to succeed in the business world. Although raising the minimum wage sounds like a wonderful idea, the consequences will not be wonderful.