Federal Minimum Wage Hike to $15 an Hour Will Hurt Small Businesses, Lead to Lost Jobs

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President-elect Joe Biden today announced a $1.9 trillion COVID-19 recovery plan that includes not only $1,400 stimulus checks to many Americans but a federal minimum wage hike to “at least $15 an hour.” CEI economic and labor policy experts warned against the real-world impact that new mandate would have on businesses and jobs.

Ryan Young, Competitive Enterprise Institute senior fellow:

“Adding a $15 per hour minimum wage to the next COVID-19 relief bill would be a mistake because the timing is terrible and the tradeoffs are not worth it. Small businesses often have a hard time making payroll as it is, with bills and rent still piling up amid COVID-related slowdowns. A higher minimum wage would do no good for the workers who would be let go because of it.

“A $15 minimum wage would also give big businesses an unfair advantage. Many big companies such as Amazon, Target, and Costco already have $15 minimum wages for their employees. Other big companies can afford to automate some jobs and have the cash reserves to absorb extra payroll for the rest. Smaller competitors might not be able to keep up, especially during hard times like right now.”

Sean Higgins, Competitive Enterprise Institute research fellow:

“Ironically, it was only a few years ago that Neera Tanden, President-elect Joe Biden’s pick to be the next director of the Office of Management and Budget, was warning Democrats against a $15 minimum wage. Tanden, speaking as president of the Center for American Progress, told Hillary Clinton’s campaign in an April 15, 2015 email, ‘Substantively, we have not supported $15—you will get a fair number of liberal economists who will say it will lose jobs.’

“Tanden was right back then: setting the federal wage that high will result in employers cutting back in hiring and limiting workers’ hours to adjust to the higher labor costs. Ultimately, the workers will see little benefit. Consumers, on the other hand, will see higher prices across the board as companies turn to higher prices for their goods and services.”