The ambitious proposal by the new American president Joe Biden to double the minimum wage to lift millions of Americans out of poverty is already on the table of lawmakers, according to France Presse (AFP). This move could prove to be a social revolution for the poorest in the United States, the news agency said.
“Even before the pandemic, the federal minimum wage of $ 7.25 [cerca de € 6] per hour it was economically and morally indefensible, “Virginia State Democrat Bobby Scott said in the presentation of the bill. Although very popular with the population – even in the ranks of Republican supporters – and supported for more than a decade by unions, the initiative ran into Republican opposition pressured by ‘lobbies’ by companies that refuse additional costs.
“This is not a radical ideal,” argues Bernie Sanders, a former progressive presidential candidate who called the $ 7.25 an hour a “starvation wage”.
“In the richest country in the world, when you work 40 hours a week, you shouldn’t live in poverty,” says the Vermont senator, who is going to present the proposal and hopes to convince skeptics.
The economic crisis caused by the pandemic mainly affects small businesses, especially the catering sector, which does not welcome this proposal included in the gigantic $ 1.9 billion (€ 1.6 billion) rescue plan.
The vice president of the National Federation of Restaurants, Sean Kennedy, welcomed the proposal, not least because he understands the obligation to pay this minimum wage in full, regardless of the tips imposed on customers. The proposal allows employers to pay employees only two or three dollars when these famous “tips” fill the gap with $ 7.25, says AFP.
However, this measure “will have insurmountable costs” for many establishments that will have no choice but to lay off employees or close their doors permanently, Kennedy predicts. For the new Treasury secretary, Janet Yellen, “the increase in the minimum wage will lift tens of millions of Americans out of poverty, while creating opportunities for countless small businesses across the country.”
It all depends on how it will be implemented, argued Janet Yellen, noting that a gradual increase – $ 15 by 2025 – would give “enough time to adapt”.
But the Biden Government highlights the virtuous circle: paying those with the lowest wages would generate millions of dollars in additional consumer spending on goods and services provided by small businesses
In 2019, 1.6 million workers were paid with a wage equal to or less than the federal minimum, that is, 1.9% of all hourly workers, according to the Statistics Office.
An hourly rate of $ 15 until 2025 would raise the wages of 27.3 million people and lift 1.3 million families out of poverty, estimated the Congressional Budget Office.
But it also estimates that it could result in the loss of 1.3 million jobs.
For Gregory Daco, chief economist at Oxford Economics, in addition to the potential impact, the proposal illustrates the social change that Joe Biden wanted.
“This confirms a management’s desire to focus more on the social and racial inequalities that led to high tensions in the past year,” says Gregory Daco.
The proposal will be difficult to pass, even if Democrats dominate both chambers. Bernie Sanders has already mentioned using a device to pass the law by a simple majority.