Joe Biden's plan to increase the minimum wage to $15 won't just help workers: A new study finds that lower wages cost taxpayers over $100 billion a year

Joe Biden's plan to increase the minimum wage to $15 won't just help workers: A new study finds that lower wages cost taxpayers over $100 billion a year
President-elect Joe Biden speaks at The Queen theater in Wilmington, Del., Wednesday, Dec. 9, 2020.Susan Walsh/AP
  • President-elect Joe Biden has called for a $15 per hour federal minimum wage as part of his new $1.9 trillion stimulus package.
  • That increase could materially impact millions of workers, and provide relief for public safety net programs.
  • While President Donald Trump has argued raising the minimum wage could harm employers, it hasn't been shown to impact employment.

President-elect Joe Biden's newly unveiled $1.9 trillion stimulus package includes one important economic measure - raising the federal minimum wage to $15 an hour.

That pay bump could be hugely consequential for millions of workers. The federal minimum wage, which hasn't changed since 2009, is currently $7.25 - less than half of what the new wage would be.

That means over 20 million workers could get a raise - and a new study finds the pay bump could also be a boon for taxpayers.

The study, which comes from the UC Berkeley Labor Center, found that the country's current low minimum wage costs taxpayers more than $100 billion a year. That's because nearly half of the working families who would benefit from the pay bump rely on at least one safety net program, such as SNAP or Medicaid.

Those programs fill in the gaps for millions of Americans, and 42% of the $254 billion spent annually on safety net programs goes toward families who would now get a raise.


"Many low-wage workers are in service occupations where they have a higher risk of exposure to COVID-19, but have not seen pay increases during the pandemic," study coauthor and chair of the UC Berkeley Labor Center Ken Jacobs wrote in a statement to Insider. "When minimum wage jobs don't pay enough, these workers often turn to public safety net programs to make ends meet."

Jacobs said that raising the minimum wage would help bring savings to those public safety net programs, which could prove helpful as states work toward recovering from the pandemic recession.

And, as Jacobs noted, many essential workers rely on those programs; so a raise in their wages would materially benefit both those workers and the programs themselves.

"President-elect Biden specifically noted that 'Too many families are unable to afford childcare, while early educators earn wages so low that they can't support their own families,'" Jacobs said. "Our new report found that half of childcare workers and 6 out of 10 homecare workers are paid so little that their families rely on one or more public safety net programs."

As Insider's Marguerite Ward reported in August, the United States was already facing a childcare crisis - and it could lead to an exodus of women from the workplace.


Some cities and states have already raised their minimum wage to be $15 per hour - or put in place plans to gradually increase to that amount - but a new national federal minimum wage would make $15 a country-wide requirement.

President-elect Biden has long been a proponent of increasing the federal minimum wage to $15, doubling down on his support during October's presidential debate. At the time, President Donald Trump argued that a wage hike could hurt employers - but, as Insider's Joseph Zeballos-Roig reported in an analysis, raises to the minimum wage haven't been shown to impact employment.

Biden would also end the tipped minimum wage and the 'subminimum' wage for disabled workers, CNBC reported. The tipped minimum wage is a lower minimum wage for workers in tipped professions, such as restaurant servers. The current national tipped minimum wage is $2.13 per hour in direct wages. Under the subminimum wage, disabled workers can legally earn under the minimum wage. Both types of wages have been scrutinized for their negative impact on workers.

"Business owners welcome President-elect Biden's call to raise the federal minimum wage to $15 because they know we can't build a strong economy on a minimum wage that pays workers too little to live on," Holly Sklar, CEO of Business for a Fair Minimum Wage, said in a statement to Insider.

"Businesses depend on customers who make enough to buy what they are selling, from food to clothes to car repairs. We're in the longest period in history without a minimum wage raise, and that's bad for business as well as workers."


The announcement comes as fast food workers in at least 15 cities go on strike for a $15 federal minimum wage. The workers are striking on what would have been Martin Luther King Jr.'s 92nd birthday.