Biden's Two Friday Moves Went Under the Radar, But the Actions Signal a Major Change Is Coming to the US Economy
In an interview with The New York Times editorial board in December 2019, when the major Democratic presidential candidates were seeking the paper’s endorsement, Joe Biden said that he wasn’t a fan of the executive order.
“And what I love hearing my colleagues say that I’m running with, saying, ‘Well, I’m going to by executive order,’” he told The Times. “And my mother would say, ‘Who died and left them boss?'”
Nobody seems to have died in the past few days, but apparently, President Biden has indeed been left as boss, because it’s difficult to keep up with the flurry of executive orders out of the Oval Office. Most of them, it was reported with scarcely contained glee, involved “reversing Trump’s legacy” — halting the construction of the border wall, ending the travel ban and rejoining both the Paris climate accord and the World Health Organization.
Little of this was unexpected, of course; new presidents often use the first round of executive orders to undo the legacies of prior presidents and to set the trajectory of their own. However, slipping under the radar in this fusillade of executive orders was one trajectory-setting move that could hinder America’s economic recovery.
In an executive order that restored some collective bargaining rights to federal government employees, Biden also paved the way for a $15 minimum wage for federal workers, according to The Hill.
That same day, he reiterated his commitment to establishing a $15 national minimum wage, as well.
In a speech on his COVID-19 economic recovery plan, Biden said that raising the minimum wage would lift people out of poverty.
“Our recovery plan also calls for an increase in the minimum wage at 15, at least $15 an hour,” Biden said.
“No one in America should work 40 hours a week making below the poverty line. Fifteen dollars gets people above the poverty line. We have so many millions of people working 40 hours a week, working, and some with two jobs, and they’re still below the poverty line.”
President Joe Biden said he is pushing for a $15 minimum wage to lift Americans out of poverty pic.twitter.com/KBVX57WgJC
— Reuters (@Reuters) January 22, 2021
The federal minimum wage is currently $7.25 an hour, although many states and local jurisdictions have higher rates. While the inclusion of the minimum wage in the president’s speech on Friday wasn’t a surprise, given that he unveiled his plans for the COVID stimulus package last Thursday, the address made it clear this was an agenda item for Biden.
While the Democrats control both houses of Congress, passing an increase to the minimum wage would require either getting 10 Republicans on board or breaking the filibuster. At least in the case of COVID relief, invoking the so-called nuclear option and passing it on a party-line vote wouldn’t be the best optics for the new administration.
When it comes to the minimum for federal workers and contractors, Biden will be able to accomplish that without Congress. His executive order directs the Office of Personnel Management to “provide a report to the President with recommendations to promote a $15/hour minimum wage for Federal employees.”
In 2014, former President Barack Obama similarly raised the minimum wage for federal contractors to $10.10 as part of a campaign to get the national minimum wage raised. Not coincidentally, $10.10 was the minimum wage he was pushing Republicans to pass, saying at the time that “America needs a raise.”
See if you can recognize this rhetoric: “Making work pay means wages and paychecks that let you support a family,” Obama said during a 2014 speech at Central Connecticut State University, according to the Hartford Courant. “Nobody who works full-time should ever have to raise a family in poverty.”
“There will always be airport workers, there will always be fast-food workers … people who work their tails off every day. People who work in nursing homes looking after your grandparents,” he continued. “If we are going to finish the job, Congress has to get on board.”
Biden’s no-malarkey style doesn’t exactly match the grandiloquence that Obama favored in his speaking, but the underlying argument remains the same: If you want to lift low-skilled people out of poverty, just make business owners pay them more. Problem solved.
Republicans didn’t get on board seven years ago and they’re unlikely to now, particularly given the economic climate in 2021. According to TrackTheRecovery.org, the number of small businesses open at the end of last year was down 29.7 percent as compared to January 2020. Even with injections of cash from Paycheck Protection Program loans and other government stimulus packages, the battering American small business has taken from the virus is of a magnitude we’ve never seen in this country.
What the Biden administration wants to do, once the economy starts reopening, is to tell small businesses they need to pay low-skilled workers more than their value on the open market. How could this fail?
And by the way, this wouldn’t just hurt small business owners. Using that same TrackTheRecovery.org data, we can see that projected employment numbers are down 8.7 percent vs. January 2020. However, for low-earning employees — defined as those earning under $27,000 a year — employment is down 25.1 percent.
Telling businesses they need to pay employees more for jobs they can’t afford to provide for people on the lowest rung of the employment ladder does nothing except kick those people off the employment ladder or see their hours reduced.
This isn’t a hypothetical phenomenon; we’ve seen it in cities and states that have raised their minimum wage to $15 and above. Believing it would be any different nationally is magical thinking — particularly given regional disparities in the cost of living and average income.
At the small business level, we’d see jobs disappear because the businesses disappeared. At the big business level, we’d see an acceleration of automation efforts.
It’s easier with the federal government, especially since President Biden doesn’t have to worry about Congress and clearly isn’t worried about spending. Out in the real world, the effects would be anything but meliorative.
Assuming the filibuster remains intact, we should be thankful Congress hasn’t died and made him boss yet.
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