Raising the minimum wage to $15 an hour would help the U.S. economy more than it would harm it, Janet Yellen, President Joe Biden’s Treasury Secretary nominee, told lawmakers on Tuesday.
“Right now we have millions of American workers who are putting their lives on the line to keep their communities functioning, and sometimes even working multiple jobs, aren’t earning enough to put food on the table and a roof over their heads,” Yellen, a former Federal Reserve chair, told the Senate Finance Committee at her confirmation hearing.
Raising the minimum wage, she said, would “really help many of those workers” and job losses as a result of it would be “very minimal, if anything.”
Biden, in his recently unveiled stimulus proposal, is pushing for a $15 minimum wage and end tip credits — a way to pay tipped workers less than minimum wage. The federal minimum wage has been $7.25 an hour since 2009. Workers at this level earn roughly $15,000 a year if they work 40 hours a week.
Yellen’s testimony differs from research the Congressional Budget Office, a nonpartisan federal agency, published in 2019 on the effects of raising the minimum wage to $15 an hour.
The agency estimated that a median of 1.3 million workers could become unemployed by 2025 if a $15 minimum were enacted. Though the same number of people would no longer be living below poverty levels, the CBO found.
The report also found that there’s a two-thirds chance there are zero to a maximum of 3.7 million job losses as a result of a $15 minimum wage.
“The last thing this economy needs as we attempt to recover is the loss of 1.3 to 3.7 million jobs,” Sen. Tim Scott, a Republican from South Carolina, said Tuesday.
In Yellen’s prior testimony as Federal Reserve Chair in 2014, she acknowledged that raising the minimum wage to $10.10 an hour, which former President Barack Obama proposed, would result in “some amount of negative impact on employment as a consequence.”
The CBO reported in 2014 that 500,000 job losses would have resulted from raising the minimum wage to $10.10 from $7.25 by mid-2016. But the tradeoff she said is “that a large number of individuals would see their incomes raised as a consequence.”
Like Scott, some economists and Republican lawmakers are concerned that raising the minimum wage would result in more job losses in industries that have taken the biggest hits during the pandemic.