NEW YORK, Jan 31 — When President Joe Biden unveiled a US$1.9 trillion (RM7.7 trillion) stimulus proposal earlier this month, few were surprised by the plan’s hefty price tag or sweeping scope.
More striking was Biden’s inclusion of a measure to more than double the federal minimum wage to US$15.
The move, backed by leading Democrats including left-wing Senator Bernie Sanders, establishes the fight for higher wages as a top priority for the new administration, potentially leading to one of Washington’s boldest adjustments in US social and labour policy in decades.
The fate of the initiative — which so far lacks support from Republicans — will help determine whether Biden delivers on a core pocketbook issue as US income inequality widens during the Covid-19 pandemic.
Sanders, a former presidential candidate, called the current federal minimum wage of US$7.25 an hour a “starvation wage” as he unveiled the proposal for an increase in Congress.
The senator said he hopes Republicans “will understand the severity of the crisis,” but added that Democrats should be prepared to enact the policy on a narrow party-line vote.
Such an increase would boost wages for more than 32 million US workers, according to the Economic Policy Institute, a progressive think tank.
The Sanders bill proposes “a significant increase in the minimum wage,” Ben Zipperer, an economist at the institute, told AFP. “Unfortunately, we have quite a big hole to dig out of in terms of providing what low-income workers need.”
Popular support
The bill would put the United States on par with a growing number of states and cities that have already enacted the hike at the urging of the “Fight for US$15” movement launched by fast-food workers in the early 2010s.
“The bump up made it a little bit easier,” said Maggie Breshears, who works at grocery store and retailer Fred Meyer in Seattle and has gone from making about US$10 per hour in 2013 to US$17.59 after Seattle lifted its minimum wage in 2014.
The US minimum wage was first enacted in 1938 as part of President Franklin Delano Roosevelt’s New Deal reforms.
The measure has been periodically increased since then, most recently in 2007, when Congress lifted it gradually from US$5.15 to US$7.25 an hour, which would equal a US$15,000 annual salary.
Barack Obama was unable to win a boost during his eight-year presidency from 2009 to 2017. In 2019, the House of Representatives approved an increase, but the bill died in the Republican-led Senate.
Compromise ahead?
Supporters of an increase draw hope from rising public support apparent in 2020, when Florida voters backed a hike to US$15 per hour at the same time the state voted for Republican President Donald Trump, who ended up losing re-election.
In Arkansas, another Republican state, 68 per cent of voters in 2018 backed gradually increasing the wage to US$11 an hour.
“If we had left it to the legislature, it would have stayed at US$6.25,” where it was before the most recent federal increase, said Kristin Foster, an Arkansas political consultant who directed the 2018 campaign. “The only way it was able to pass was through the ballot.”
Several large companies, including Amazon, Target and Starbucks, have set US$15 as their minimum wage for US workers.
Others that once fought the measure have given ground. These include McDonald’s, which said the discussion on the minimum wage represents an “important one that McDonald’s looks to advance, not impede.”
Supporters of the wage increase welcome large companies’ endorsements, but say it is too soon to know whether they will shift the politics of the issue.
The Business Roundtable, which represents the biggest US companies, said the Sanders bill was a starting point.
“We agree that the current federal minimum wage of US$7.25 is too low, and we are in favor of an increase at the federal level,” said a spokeswoman.
Small business scepticism
But the Sanders bill drew criticism from other groups, including those representing small businesses and restaurants, which say they have suffered more than large firms during Covid-19.
Howard Wright, the chief executive of Seattle Hospitality Group and the co-author of Seattle’s 2014 wage hike, said companies should be able to raise the wage as long as it is done gradually.
“What we are averse to is surprise and having things we can’t control,” said Wright, who favors correlating the wage level to the local cost of living, given the diversity of the US.
In response to written questions on whether to index local costs, Treasury Secretary Janet Yellen emphasised the need for a “nationwide” wage hike “phased in over time.”
Holly Sklar, the founder of activist network Business for a Fair Minimum Wage, rejected indexing the wage to regional costs.
“The minimum wage is supposed to be something that helps everyone rise,” she said. “Any state can go higher.” — AFP
