Minimum Wage Increase Attempted for the First Time in 11 Years... Can Biden Succeed?

Frozen at $7.25 for 11 Years... Biden's Pledge to Double to $15 by 2026
COVID-19 Hits Lower Income Groups Harder, Policy Support Higher Than Before

Analysis of 1.3 Million Unemployment Cases if Raised... Possible by Executive Order Even if Law Does Not Pass

[Asia Economy Reporter Kwon Jae-hee] With the inauguration of the next administration under Joe Biden, the issue of raising the minimum wage is expected to become a political storm in the U.S. President-elect Biden has pledged to raise the federal minimum wage, currently $7.25 per hour, to $15 by 2026, doubling it. While progressive forces within the Democratic Party urge haste, conservatives express concerns that the economic downturn could lead to job losses.

Regarding the minimum wage increase, there is growing consensus in the U.S. that it has become more likely with Biden's election. CNBC reported earlier this month, after Biden's victory was confirmed, that "the possibility of a minimum wage increase has become higher." Especially since the federal minimum wage has been frozen for 11 years since the financial crisis in 2009, and after the Democratic Party's minimum wage increase bill failed in the Senate last year, public opinion favoring a wage hike has grown.

Biden also recently mentioned the minimum wage increase for the first time since his election during an economic policy briefing, stating, "We will build back better by paying $15 an hour across the country," and added, "Workers will have stronger bargaining power to support their families."

Once the Biden administration takes office, it is highly likely that support will be provided at the party level as well. The Democratic Party emphasized in its platform announced last July that "while incomes have stagnated for decades, the costs of basic living expenses such as housing, healthcare, and education have risen sharply," stressing the need to raise the basic income. Senator Elizabeth Warren, classified as a progressive within the party, recently urged strongly for a minimum wage increase, saying, "Take the tools out of the toolbox and use them."

The minimum wage increase seems to be gaining more support after the COVID-19 pandemic, as the economic activity restrictions have hit lower-income groups harder than expected. In the U.S., women earn only 82 cents for every dollar earned by men, and statistics show that white households have six times more wealth than Latinx households and ten times more than Black households.

Some companies are also moving quickly to raise their minimum wages. Starbucks has decided to increase the hourly wages of in-store employees such as baristas and managers by more than 10% starting next month on the 14th. CNBC interpreted Starbucks' wage increase plan as preparation for an anticipated federal minimum wage hike under the Biden administration, which has been stuck at $7.25 for over a decade.

Of course, minimum wage increases through industry competition are already underway. The major U.S. retailer Target raised its minimum hourly wage from $13 to $15 starting July 5. Target has steadily increased its minimum wage over the past three years to match the wage levels of competitors like Amazon and Costco, aiming to prevent existing staff from leaving and to attract new hires.

Some argue that government-led minimum wage increases could negatively impact youth employment, potentially sparking controversy over a so-called "U.S.-style income-led growth." The Congressional Budget Office analyzed last year’s Democratic minimum wage proposal and found that raising the federal minimum wage to $15 by 2025 would benefit 17 million workers with higher pay but also result in 1.3 million job losses.

William Wascher, a Federal Reserve economist and U.S. minimum wage researcher, stated, "Reviewing analyses from the U.S. and other countries shows that raising the minimum wage actually leads to increased layoffs," adding, "While Hispanic immigrant workers, Black workers, and other low-wage workers may see income gains, the group most directly affected is the youth."

Fox Business also reported on the Biden administration’s push for a minimum wage increase, saying, "Chief Financial Officers (CFOs) of companies will prepare for the wage hike by raising product prices or improving operational efficiency." The Republican Party shares this view. Representative Steve Womack criticized, "If the minimum wage bill passes, American workers will lose their jobs."

The Biden administration’s minimum wage increase is expected to be possible in some form. The optimal method is to submit a bill to Congress and have it passed, but it can also be done through a presidential executive order. The runoff election for the Georgia Senate seat in January next year is currently seen as a turning point.

This content was produced with the assistance of AI translation services.