Democrats Aim to Raise Minimum Wage to $15/hr.

February 1st, 2021 by Drew Vass

With Joe Biden sworn in as the nation’s 46th president, the new administration comes with an agenda for providing ongoing aid to Americans—including increases to the federal minimum wage. Those changes, the President says, should not only provide immediate relief for the lowest-earning workers, but additional improvements going forward.

“Hard working Americans deserve sufficient wages to put food on the table and keep a roof over their heads, without having to keep multiple jobs,” states a fact sheet for the President’s federal relief package, adding, “But millions of working families are struggling to get by.”

The President’s call was answered last week by a legislative proposal aiming to increase the federal minimum wage to $15 per hour. Presented by House Committee on Education and Labor chairperson Robert C. Scott (Va.) and led by Senators Bernie Sanders (I-VT) and Patty Murray (D-WA), Raise the Wage Act of 2021 would start with an increase from the current rate of $7.25 per hour to $9.50 on the effective date of new legislation. The rate would then increase by an additional $1.50 per year for three years thereafter, followed by a $1 increase in 2025 to $15 per hour. After reaching the $15 mark, the bill then calls for indexing future rates by median wage growth in order to ensure that the minimum keeps pace with economic inflation.

So far as how those increases would affect door and window companies, numerous dealers tell [DWM] there would be no immediate impacts, as their entry-level positions already pay above the proposed minimums. In the future, however, increased wages across other industries could extract workers from positions such as door and window installers, fears Troy Jenkins, CEO of Walker Windows in Anaheim, Calif.

“Long term I believe it would impact our business because entry level workers would have more options to take less labor-intensive jobs, which will drive our minimum rate of pay higher to attract and retain these positions needed for our business,” Walker says.

Tom Casey, sales manager for Home Town Restyling in Hiawatha, Iowa, says he also fears that increases would make it difficult for unskilled laborers to obtain jobs and work their way up through the industry.

“We will eventually have to make sure we pay our skilled labor more than an entry level employee,” Casey adds. “So long term it will drive up the cost of everything.”

Adapted from Minimum Wage and Maximum Hours Standards Under the Fair Labor Standards Act (FLSA), minimum wage requirements have seen a range of increases over the years—most notably in 2007, when amendments increased the rate to $5.85 per hour, and in 2008, when it rose to $6.55 per hour. The current rate of $7.25 per hour was enacted in July 2009 and has remained despite numerous attempts to advance increases. The nearly 12-year stretch represents the longest without increases since the requirement was first set in 1938.

In addition to the federal rate, the majority of states also have minimum wage laws that employers must comply with—including 30 states that require above the federal level. Five states mandate more than $12.50 per hour, while the District of Columbia currently requires $15 per hour.

“It is expensive to live in the D.C. area, so that really impacts the living wage we offer our employees,” says Tara Novotny, vice president of Windows on Washington Ltd., in Dulles, Va. To find serious candidates for entry-level positions, Novotny says her company often exceeds the district’s current $15 minimum.

According to an independent analysis conducted by the Economic Policy Institute,
“The Raise the Wage Act follows the lead of the growing number of states and cities that have adopted significant minimum wage increases in recent years.” Currently, proposed increases would raise wages for nearly 32 million Americans—including approximately a third of all Black workers and 25% of all Latino workers, the Institute says in its analysis. Among those to benefit, more than half would be women. If enacted, the resulting annual pay increase would amount to around $3,300 per year for the average worker, the analysis says. The proposed bill would also ensure that teen workers are paid at least the full federal minimum, by doing away with a subminimum wage for youth workers, while also ending subminimum wage certificates for workers with disabilities.

“Even before the COVID-19 pandemic, the $7.25 federal minimum wage was economically and morally indefensible,” says chairperson Scott. “Now, the pandemic is highlighting the gross imbalance between the productivity of our nation’s workers and the wages they are paid.” Many of the essential workers helping to face down a public health crisis are among those not being paid enough to provide for their families, he suggests.

“I have great empathy for low-income families,” says Scott Barr, owner of Steward of Southwest Exteriors. “They are stuck and it is difficult to break the cycle of poverty.”

The House passed a similar version of the bill in 2019, known as the Raise the Wage Act, though it failed to advance through the Senate. The current bill would need to make its way through the House and Senate before reaching the desk of an eager President.

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  1. While I am sympathetic to deadlines in publishing, in the future, I would encourage the editors at DWM to take the time to research facts and present both sides of the argument rather than just regurgitating political talking points put out by the Whitehouse press office. There is no reason to assume the market would react any differently to this increase in minimum wage than it has acted in response to ALL previous increases. Based on the application of those precedents and adjusting for current labor and population numbers, all that would happen is that an estimated (and this is a conservative estimate) 300,000 – 500,000 jobs would be eliminated at $15/hour national min. wage, and as always, this would affect minority communities and younger workers at a very high rate. Thus, and as usual, the unintended consequences of well intentioned policies actually hurts those that proponents claim to want to help. It was an economically negative (and straight out racist) policy in 1938 and it still is today. The facts support no other conclusions.

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