Monday, January 18, 2021

What employers can expect from Biden’s presidency: A $15 minimum wage

This week I'll be examining what employers can expect from Joe Biden's presidency. Today, a $15 minimum wage.

Late last week President-elect Biden released his America Rescue Plan, a comprehensive legislative package to provide relief to those struggling because of COVID-19. Among its proposals was a $15 minimum wage.

Here's what the president-elect's proposal says:

Throughout the pandemic, millions of American workers have put their lives on the line to keep their communities and country functioning, including the 40 percent of frontline workers who are people of color. As President-elect Biden has said, let's not just praise them, let's pay them. Hard working Americans deserve sufficient wages to put food on the table and keep a roof over their heads, without having to keep multiple jobs. But millions of working families are struggling to get by. This is why the president-elect is calling on Congress to raise the minimum wage to $15 per hour, and end the tipped minimum wage and sub-minimum wage for people with disabilities so that workers across the country can live a middle class life and provide opportunity for their families.

To sum up, President-elect Biden proposes raising the federal minimum wage to $15 per hour, eliminating the tipped minimum wage, and eliminating the sub-minimum wage for people with disabilities.

I have questions.

  1. Will this happen all at once, or be a stepped increase over years to allow businesses to better adjust and prepare?
  2. What will stop businesses from laying off workers and otherwise reducing headcount to minimize the impact on their overall payroll?
  3. Will it force the closure of low-margin and other businesses that simply cannot remain profitable with a $15 minimum wage?
  4. Won't businesses just pass the cost of these higher wages to consumers, thus increasing the cost of goods and services for all and minimizing the impact on low-wage workers also by increasing their spend?
  5. What happens to employees already earning $15, and those earning between the current minimum wage and $15? If they all become "minimum wage workers," employers very well might end up with an employee-relations nightmare. If they receive wage increases above $15, it will further impact companies' payroll expenses and the costs passed on to consumers. 
There is no doubt that people need to earn a livable wage. Let's just make sure we do this correctly so that we don't destroy the businesses that employ them.

Tomorrow: paid COVID-19 leave and expansion of the FFCRA.

* Photo by NeONBRAND on Unsplash