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Law in the Marketplace: Can New Hampshire businesses afford a $15 minimum wage?

Written by: John M. Cunningham

Published in the Concord Monitor (1/23/2021)

President Joe Biden’s first 100 days in office began, of course, on Jan. 20. It is certain that before the end of January, he will introduce in Congress one or more bills aimed at dealing not only with the devastating health impact of the Covid pandemic on all Americans but also on the pandemic’s devastating economic impact on middle- and low-income workers.

The terms of Biden’s economic legislation will affect all New Hampshire businesses and all of the employees of these businesses. But the provision in this legislation that will affect New Hampshire low-income workers the most will undoubtedly be the provision, almost certain to be included in it, that will, whether immediately or over a period of years, raise the mandatory federal minimum wage from its current $7.25 per hour – which is also the present New Hampshire minimum wage – to $15 per hour. Indeed, on Friday, President Biden issued an executive order requiring federal agencies and all companies doing contract work for the federal government to pay their employees a minimum of $15 per hour.

In 2020, the New Hampshire Legislature enacted a bill providing for a gradual increase of New Hampshire’s hourly minimum wage to $15. However, that proposal was vetoed by Governor Sununu, and he will undoubtedly veto any similar New Hampshire bill as long as he is office. But of course he cannot veto a bill providing a mandatory federal minimum $15 an hour wage. President Biden’s bill will apply in all 50 states and the District of Columbia, it will require every business in each of these states and the District to pay their employees this minimum wage, and it will presumably impose penalties for violations.

Current federal poverty guidelines provide that in order to cover clothes, transportation and minimum room and board, including food, in 2021, a household of one person will require an annual income of $12,600 and a two-person household will require $17,240. However, an individual— say, a mother who is the sole support of one child and who works for the New Hampshire minimum wage for 2,000 hours in 2021 will earn only $14,500. This means that even living as frugally as possible, that woman will earn $2,740 less than she needs to support herself and her child. There are, of course, thousands of such single moms in New Hampshire, and many of them are people of color. A federal law raising the minimum wage from $7.25 to $15 will mean a raise in such a woman’s annual wages from $17,200 to $30,000, In so doing, it will vastly improve her own quality of life and that of her child. Among other benefits, it will enable her to provide living conditions and nutrition for herself and her child that will greatly reduce the major health risks that follow inevitably from an annual income of only $12,600.

What, then, is the likelihood that a Biden bill raising the federal minimum wage to $15 will be enacted?

Five common and, in my view, reasonable arguments against such a bill are these:

■ A $15 minimum wage may benefit some workers, but it will hurt many more, since many businesses, and especially many smaller businesses, that are able to afford paying their workers $7.25 per hour cannot afford $15. Thus, if the federal government imposes a $15 rate, this will mean either that these businesses will fail or that jobs for these individuals, and particularly jobs for teenagers, which would have been available at a $7.25 rate will be unavailable at $15.

■ The imposition of a mandatory $15 minimum wage will force businesses to automate work now being done for them by individual workers. This automation will reduce employment opportunities for large numbers of workers.

■ A $7.25 hourly rate takes into account the radical impact of economic globalization on American workers. A $15 rate would ignore that impact.

■ Hardly any federal bill impacting private businesses, and particularly small businesses, can have a more destructive impact on these businesses than federal minimum wage legislation. Healthy capitalism cannot survive so radical a federal intervention.

■Because an increase of the minimum wage to $15 will increase business costs, it will force businesses to raise the price of consumer goods, and it will force landlords to raise rents.

However, there are also many reasonable arguments supporting a federal $15 minimum wage requirement.

■ The strongest argument is perhaps that many states, including Connecticut, Maryland, New York and Virginia, have already enacted laws providing for $15/hour minimum wages. And California, Washington, and Massachusetts already provide for minimum wages between $12 and $14 per hour. These laws have had no significant negative effect on business survival, business income or business employment in these states.

■ Indeed, the majority opinion among economists is that $15 minimum wage laws benefit the states that have them, since individuals increasing their wages because of these laws will spend the entire increase in their states.

■Polls indicate that a $15 minimum wage is supported by more than two-thirds of all American voters.

■Raising the federal minimum wage to $15 will benefit at least 40 million workers, constituting more than 26% of the American workforce.

■The above increase will constitute a major step in decreasing the immense and growing income inequality in America. Many political scientists view income inequality as the most substantial of all threats to American democracy, since individuals harmed by this inequality will eventually lose their faith in democracy and turn to autocracy.

■The increase might perhaps reduce the number of jobs available to American teenagers, but this group of workers constitutes only about 10% of workers who would be affected by the increase.

■As indicated, laws requiring a $15/hour minimum wage have caused no discernible economic damage in any state and have provided major economic benefits in the states in which they have been implemented, particularly for women and people of color. Thus, gender equality, racial equality and sheer human compassion mandate these laws.

Reasonable people may differ about the merits of the above arguments. However, my guess is that a Biden increase of the minimum wage to $15/hour will easily gain the support of a majority in both houses of Congress. Thus, New Hampshire business owners should begin planning for such an increase even now.

However, if Republicans, independents or even conservative Democratic senators threaten to filibuster the increase – something which, under current Senate rules, can be done anonymously and quickly – the increase will fail. This failure may provide major protection to New Hampshire business owners and their employees; or it may bring them devastating harm.

 

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