The path to a $15 an hour federal minimum wage is laden with mountains to climb, so earners shouldn't expect it to happen for some time, if at all in their lifetimes.
"We think the odds of an increase to $15 are low," said Goldman Sachs chief economist Jan Hatzius.
The existing federal minimum wage is $7.25 an hour. It hasn’t been raised since 2009 despite across the board inflation in things like rent payments and medical costs. The impact of inflation on minimum wage earnings could partially be seen in the below chart by Hatzius' team.
But President Biden has swung the door wide open on the minimum wage debate in the early days of his presidency. He called for it to be included in a new $1.9 trillion stimulus plan designed to fight the COVID-19 pandemic, although he has recently backed off on having it stuffed into the recovery plan.
No doubt Biden is hoping he could ride the wave of those states passing a $15 an hour minimum wage legislation to enact it at the federal level as well.
In November 2020, Florida voters approved a ballot measure to gradually lift the minimum wage to $15 by 2026. The lowest paid workers in the state now earn $8.65 an hour, up from $8.56 an hour in 2020. It will move to $10 an hour on Sept. 30.
A total of 20 states raised their minimum wages on Jan. 1 as they march to the $15 an hour mark, Yahoo Finance Ben Werschkul writes.
An increase to $15 an hour would be a major boost to many workers, studies show.
The Congressional Budget Office (CBO) found a $15 an hour minimum wage would boost the wages of 17 million workers. Hatzius estimates that about 30% of workers would benefit from the direct or spillover effects of a $15 minimum, more than half of them adults with family incomes below $50,000.
While Hatzius isn't bullish on the likelihood of a $15 minimum wage being passed by lawmakers, he does see a path to increasing it at the federal level.
"Democrats have three options for raising the minimum wage: they could attempt to pass an increase via the reconciliation process, they could change Senate rules to pass an increase with only 51 votes, or they could win bipartisan support. A key obstacle is that a $15 federal minimum would affect states quite differently, and Democratic senators from some lower-wage states have not yet signed on. A compromise at $10-11, implemented no faster than $1 per year, appears to be more politically realistic," Hatzius said.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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