Washington, D.C. — Last week, President-elect Joe Biden released his plan for a $1.9 trillion COVID-19 relief package.
Included in the package is a $1400 stimulus check, an increase in unemployment insurance, business subsidies, and, curiously, an increase in the Federal Minimum Wage.
The current Federal Minimum Wage is $7.25 an hour, as set by the Fair Labor Standards Act.
Biden’s plan is an odd one, considering many businesses are already struggling to stay open amid the constant shutdowns and regulations set by state and local governments. It is fair to wonder how many businesses will shut down with the prospect of increased labor costs.
It is a scientific fact that increasing the minimum wage results in higher unemployment rates and higher prices.
Labor is typically the highest cost an employer has. If those costs increase (as they do with minimum wage hikes), businesses have to make up for lost revenue either by raising prices or cutting employees.
The responses businesses make depends on the industry itself, and some industries are more hurt than others. The scale and severity of the response depends on each individual business.
For example, Mcdonald’s may respond by investing in more kiosks instead of cashiers and may not make drastic changes to their prices. The local sandwich shop down the street with the owner who is barely making ends meet may have to layoff multiple workers or shut down entirely.
In 2019, the University of Washington published two studies in response to a minimum wage hike Seattle passed seven years ago. In their studies, UW found that child care was deeply impacted, with costs rising dramatically, as opposed to the costs at supermarkets that, in this study, did not see significant price increases.
The study did not cite changes in employment numbers, which may have been affected in supermarkets instead of prices.
The businesses hurt most by minimum wage hikes tend to be small mom-and-pop shops as opposed to big franchises like McDonald’s or Walmart. Many small businesses are likely to face a shutdown if Biden’s plan goes forward.
Workers are also disproportionately affected by minimum wage hikes. Those most affected are young and minority workers. Young people seeking employment, in general, are already unemployed at three
times the rate of the average American. African American teens have an unemployment rate of 21.3 percent, according to the Bureau of Labor Statistics.
Young workers, aged 18-25, have the most to lose with a higher minimum wage. When businesses are forced to choose between which employees to let go, they often choose the workers with less experience. The same goes for the hiring process.
Minimum wage is yet another policy that benefits some but leaves many hurt and out to dry in the unemployment line. In the middle of a pandemic-induced recession, a minimum wage hike would force
many people into poverty.
It is uncertain whether the proposed minimum wage increase will have any traction in Congress, but Biden has made his intentions clear that it will be in his proposal to Congress starting next week.
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01182021, The things slowjoe does, says , either by his own efforts, or lack of understanding of business, management, finance, economics, or by those who make his lips move, plant false information in his demented brain, we got to wonder. We all knew from the time he was selected to be the trojan horse of liberal/socialist assault on our country, he would be gone quickly. The question that rises up in how liberal/socialist think process, nefarious planning, is working , they are moving quickly to make slojoe look as incompetent as we all ways knew he is/was, now as soon as possible. It would seem the original plan is moving faster to replace him with the one of the worst aberration possible for this country. this is half of what I really wrote.
Making as many people as possible dependent on government is a goal of the socialist Democrats. This will help them achieve that goal. Of course, opening the borders to illegal aliens, combined with a high minimum wage for legal workers, will assure massive under the table off the books workers–just like the rich Democrat leaders have already.