Biden's push to raise the minimum wage could hurt small businesses

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President-elect Joe Biden is seeking to raise the federal minimum wage to $15 an hour as part of his massive $1.9 trillion coronavirus stimulus proposal, which could deal another financial blow to small businesses already struggling during the pandemic.

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Biden unveiled the measure — which includes a one-time $1,400 stimulus check, extended unemployment benefits through September and funding to accelerate vaccine distribution — during a primetime address in Wilmington, Del., on Thursday. He had previously indicated that hiking the minimum wage would be a priority, but had not indicated it would be part of a broader relief deal.

“No one working 40 hours a week should live below the poverty line,” Biden said. “People tell me that’s going to be hard to pass. Florida just passed it — as divided as that state is — they just passed it. The rest of the country is ready to move as well.”


The proposal would increase the minimum wage, which has been stuck at $7.25 per hour for the past decade, to $15 per hour and would end the tipped minimum wage and sub-minimum wage for people with disabilities.

But according to a recent analysis published by the Congressional Budget Office, a nonpartisan agency, as many as 3.7 million workers could lose their jobs as a result of the minimum wage increase. At the same time, the CBO projects that some 17 million workers would receive a pay boost.

"For most low-wage workers, earnings and family income would increase, which would lift some families out of poverty," the report said. "But other low-wage workers would become jobless, and their family income would fall—in some cases, below the poverty threshold."

The pandemic has already devastated small businesses, which employ roughly 59 million Americans, or about 47.5% of the nation's entire workforce. One estimate from Yelp found that between April and September of last year, 160,000 businesses closed — or about 800 per day.


Biden also included aid for small businesses in his relief proposal, asking Congress to set up a $15 billion grant program separate from the Paycheck Protection Program. The proposal would also make a $35 billion investment in some state, local, tribal and non-profit financing programs that can provide low-interest loans and venture capital to help small businesses.

Even with a monopoly on power, however, Biden could have a difficult time getting the aid package passed: Unless the Senate uses a tool known as "reconciliation" that requires only a majority vote — which Biden has signaled he doesn't support — then the legislation will need 10 GOP votes in order to pass.

Mitch McConnell, the top Republican in the Senate, blocked a minimum-wage increase that the Democratic-controlled House passed in 2019. Republicans argued that raising labor costs would deal another blow to small businesses already reeling from the pandemic.

"True to form and his signature failed ‘stimulus,’ President-Elect Biden launches yet another economic blind buffalo that does nothing to save Main Street businesses, get people back to work, or strengthen our economy," said Rep. Kevin Brady, R-Texas.


Still, some economists have questioned that view after a record number of cities and states raised their minimum wage without seeming to trigger a rise in unemployment.

Raising the minimum wage could also boost the nation's economy: According to one study published by the University of California Labor Center, the country's current low minimum wage costs taxpayers more than $100 billion a year because nearly half of working families rely on government programs such as Medicaid or SNAP.

"The increased income would materially improve the lives of these workers and their families. It would also reduce the burden placed on federally- and state-funded public safety net programs, which working families turn to when they do not earn enough to meet their basic needs," the report said.

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