The job losses from boosting the federal minimum wage to $15 would be “very minimal,” Treasury Secretary nominee Janet Yellen told lawmakers on Jan. 19.
“In terms of potential job loss, there’s now a large economic literature on this, and much of it suggests that raising minimum wages … researchers often look at what happens if one state raises its minimum wage and a neighboring state leaves it alone to see how businesses fare in the two different places with different treatments, and the findings are that job loss is very minimal, if anything,” Yellen told members of the Senate Finance Committee in Washington during a partially virtual confirmation hearing.
“So I think that the likely impact on jobs is minimal. That’s my reading of the research.”
The nonpartisan Congressional Budget Office estimated last year that raising the minimum wage to $15 an hour would wipe out a minimum of 1.3 million jobs.
“By increasing the minimum wage to $15 an hour, it could shutter somewhere around 3.7 million jobs, on the high end. The last thing this economy needs, as we attempt to recover, is a loss of 1.3 to 3.7 million jobs,” Sen. Tim Scott (R-S.C.) told Yellen, before prompting her answer by asking what she thought.
Raising the minimum wage would increase the cost of doing business significantly, devastate the opportunity to develop new jobs in rural America, and affect people trying to enter the workforce, Scott said, calling it an “existential threat” to both restaurants and employees.
Harsh restrictions imposed to try to curb the COVID-19 pandemic have led to millions of job losses over the past year, some of which haven’t returned yet.
“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 and aren’t earning enough to put food on the table,” said Yellen, who chaired the Federal Reserve during the Obama and Trump administrations. “And they’re suffering in countless ways, especially during this pandemic and really struggling to get by, and raising the minimum wage would really help many of those workers.”
Scott disagreed with the nominee, telling her: “I would say that there is no doubt that when you artificially increase the minimum wage, you are going to permanently decrease the number of jobs in the economy.”
“People tell me that’s going to be hard to pass, Florida just passed it. As divided as that state is, they just passed it. The rest of the country is ready to move as well should be a national minimum wage of $15 an hour. No one working 40 hours a week should live below the poverty line,” President Joe Biden told a press conference in Delaware, at the time.
The plan’s fate in the Senate is uncertain, as other Republicans besides Scott have expressed reservations.
“If the federal government mandates a universal $15 minimum wage, many low-income Americans will lose their current jobs and find fewer job opportunities in the future,” Sen. Pat Toomey (R-Pa.) said in a statement. “The best thing that the federal government and states can do for economic growth right now is to quickly vaccinate as many Americans as possible and fully reopen this economy.”
If confirmed, Yellen would be the first woman to lead the Treasury Department.