Why is federal minimum wage hike controversial in United States

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Photo taken on Sept. 18, 2019 shows U.S. dollar banknotes in Washington D.C., the United States. U.S. Federal Reserve on Wednesday lowered interest rates by 25 basis points amid growing risks and uncertainties stemming from trade tensions and a global economic slowdown, following a rate cut in July that was its first in more a decade. (Xinhua/Liu Jie)
Photo taken on Sept. 18, 2019 shows U.S. dollar banknotes in Washington D.C., the United States. U.S. Federal Reserve on Wednesday lowered interest rates by 25 basis points amid growing risks and uncertainties stemming from trade tensions and a global economic slowdown, following a rate cut in July that was its first in more a decade. (Xinhua/Liu Jie)

A 15-dollar federal minimum wage increase is included in the 1.9-trillion-U.S.-dollar COVID-19 relief package passed by the Democrats-held House early Saturday morning amid Republican opposition.

The measure, which is a major legislation for President Joe Biden, would face tough tests in the Senate, where parliamentarians have ruled that the wage increase violates the budget reconciliation process and cannot be included.Democrats last month introduced a bill to raise the minimum wage from 7.25 U.S. dollars an hour to 15 U.S. dollars an hour by 2025, after Biden campaigned on the issue for months before last year’s elections.

Proponents contend that a minimum wage increase is needed to provide for families and children’s education, as costs have increased substantially in recent years.The minimum wage hasn’t been raised in over a decade, and it’s become harder and harder for adults working at minimum wage jobs to pay for housing and food, Christopher Galdieri, assistant professor at Saint Anselm College, told Xinhua.An increase would boost the economy by putting money in the pockets of folks who would quickly spend it, he said.”If you’re working a minimum wage job and suddenly start making a few dollars an hour more, that money will almost all be used for long-delayed expenses, from car repair to new shoes,” said Galdieri.But some fret over such a bill’s impact on small businesses.”Some worry about the negative ramifications for small businesses, especially during a pandemic,” Brookings Institution Senior Fellow Darrell West told Xinhua.It “might have the effect of pricing some workers out of the labor market, especially in the less prosperous states,” said Desmond Lachman, a resident fellow at the American Enterprise Institute.”If that were to occur, while those workers who retain their jobs might benefit from the proposed wage hike, those who lose their jobs as a result of the minimum wage hike will be worse off,” Lachman told Xinhua.

According to the Congressional Budget Office, a minimum wage boost would increase the pay of 17 million U.S. workers, but 1 million to 3 million jobs would be lost.
“First, and this is important — most news coverage ignores the fact that the increase would happen in annual steps, not in one jump,” Clay Ramsay, a researcher at the center for international and security studies at the University of Maryland, told Xinhua.There are a number of arguments for and against a nationwide increase, Ramsay said.

The best argument against a nationwide increase is that “this issue is best left to the states, because the U.S. economy has so many regional differences,” he said.
It may well be appropriate for New York state to raise its minimum wage and for Missouri to keep it at 7.25 dollars an hour as prices and purchasing power are quite different between those states, Ramsay said.”The second-best argument is that in this recession a vast number of small businesses may go under. Raising the minimum wage right now puts one more strain on these businesses and could be the straw that breaks the camel’s back,” he said. “Losing a whole layer of small businesses will only make jobs scarcer and that could slow the recovery a great deal.””The most important argument in favor of raising the minimum wage is that if you don’t raise it, you’re always cutting it,” Ramsay said.

The minimum wage only goes up when Congress is willing to raise it. The last time the minimum wage went up was in 2009, based on a law passed in 2007.It has been 7.25 U.S. dollars an hour for 12 years. A person on the minimum wage today is making 5.99 an hour in 2009 dollars, Ramsay noted.Some economists argue things will get better for lower-paid workers as the economy makes a comeback from the pandemic this year as the nation is ramping up vaccine’s distribution.”There is reason to think that things will improve for lower paid workers in the later part of this year as we gradually return to a more normal economy once most of the U.S. public is vaccinated,” Lachman said.There are also hopes that the massive stimulus Democrats want to pass will substantially help.”The U.S. economy will be getting a very strong boost from the Biden 1.9 trillion (U.S. dollar) stimulus package, which will be targeted at those who have been left behind,” Lachman said.

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