Biden raised the minimum wage in the USA: who will be affected by the changes - ForumDaily
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Biden raised the minimum wage in the USA: who will be affected by the changes

On Tuesday, April 27, President Biden signed a decree raising the minimum wage paid to federal contractors to $ 15 an hour, writes New York Times.

The new minimum is expected to take effect next year and is likely to increase the wages of hundreds of thousands of workers, according to a White House document. The current low is $ 10,95, according to a 2014 executive order signed by President Barack Obama. Like this decree, the new one requires the minimum wage to rise with inflation.

“I believe no one should work full time and still live in poverty,” Biden said in a Twitter post announcing the move.

Photo: twitter.com/POTUS

White House economists believe the increase will not lead to significant job losses, a recent study on the minimum wage found, and that it is unlikely to cost taxpayers any extra money, two administration officials said on a call with reporters. They argued that higher wages would lead to higher productivity and lower turnover.

And while the number of workers directly affected by the increase is small as a share of the economy, the administration argues that the executive order will indirectly increase wages and outside the labor force of federal contractors, forcing other employers to raise wages as they compete for workers.

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Paul Light, a federal workforce expert at New York University, recently estimated that five million people work on federal contracts, on which the government spends hundreds of billions of dollars annually. The contracting companies employ security guards, food workers, janitors, call center workers, nurses, and computer support specialists, among others.

The government requires that many contract workers be paid the prevailing wage—essentially the going rate for an occupation in a particular location, as determined by the Department of Labor. But their wages will increase as a result of the decree if the prevailing wage is less than $15 an hour. An analysis by the liberal Economic Policy Institute estimates that 390 workers would directly benefit.

A recent report by the Government Audit Office found that violations of government-set wage rates and benefits such as vacation pay were common among contractors, leading to the withholding of compensation in the hundreds of millions of dollars from 2014 to 2019.

The Biden administration has proposed increasing the enforcement budget for the Department of Labor, which monitors whether contractors comply with wage and benefit rules, by nearly 20%.

Several cities have minimum wages of at least $ 15 an hour, and several states have laws that will raise minimum wages to at least that level in the coming years. So far, there is little evidence of how the $ 15 minimum wage affects employment in cheaper areas of these states.

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Two years ago, the House of Representatives passed legislation to raise the federal minimum wage to $ 15 an hour by 2025, but the bill ran into more trouble in the Senate. Biden tried to include such a measure in his $ 1,9 trillion pandemic relief package so that it could be passed by a simple majority, but the Senate ruled that the measure could not be included.

Biden's executive order will also abolish the so-called tipped minimum wage for federal contractors, which now allows employers to pay tipped workers $ 7,65 an hour if their tips exceed the normal minimum wage. Under the new minimum, all workers must earn at least $ 15 an hour.

Technically, the decree will kick off the rule-making process, which is expected to be completed by early next year. Salaries will be included in new contracts and in existing contracts as they are renewed.

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