In the weeks following his inauguration, President Biden has rolled out what he calls the “American Rescue Plan.”
According to the White House, the plan calls for a multitude of different ways to combat the ongoing COVID-19 pandemic.
Key measures include increasing vaccine production and rollout, direct payments to American citizens, and advanced testing.
One of the most divisive parts of Biden’s plan is the call for an increase in the federal minimum wage to $15.
Even the Wall Street Journal claims that “economists are divided on the effects of a $15 minimum wage”.
Some economists believe that a drastic increase in the minimum wage, such as the one proposed by the Biden Administration, would lead to inflation and increased unemployment.
In short, that some people would remain employed and reap the benefits of a higher wage while others would face higher prices and no compensation.
According to the same Wall Street Journal article, the economy’s hardest-hit area during the pandemic were businesses such as restaurants and hotels.
The hospitality industry lost 3.8 million jobs last year, and opponents of the wage hike believe it would hit these same businesses the hardest, possibly forcing more layoffs.
Other economists disagree and say that a wage increase will be fairer towards workers and help America’s poverty problem.
However, many economists have little to no experience evaluating the economy during a global pandemic.
During a pandemic, small businesses would surely be different from the effect during a typical year with no pandemic or economic struggle.
According to the Labor Department, the Leisure and Hospitality sector (inclusive of businesses, restaurants and hotels) employ the highest number of low wage workers.
Opponents believe that a wage increase would doom this sector, which is already struggling, while proponents see it as preventing families from further economic hardships.
One thing is for sure is that American workers desperately need financial relief.
Raising the minimum wage, by all means, is no total solution to the economic downturn, but the Biden Administration believes it could be the lifeline America needs.
No economist or scholar truly knows the exact result of our economy if the minimum wage is raised. Consider Biden’s minimum wage proposal to be a lab test to the American economy.
Maybe it will work; most likely, it won’t, but the American people need answers. And not answers in the form of an economic experiment.