The U.S. Senate will soon vote on the Fiscal Year 2021 Budget resolution, S.Con.Res. 5. Senator Tim Scott introduced an amendment to this resolution which would prohibit an increase in the minimum wage from taking effect during the pandemic.

Americans for Tax Reform supports this amendment and applauds Senator Scott for working to protect American workers during a time of already-high unemployment. If a minimum wage were to be implemented, it would reduce jobs, increase automation, and crush small businesses. During a pandemic, which has resulted in an economic downturn, these effects would be even more detrimental.

A recent report from the Employment Policies Institute (EPI) found that a nationwide mandate for a $15 minimum wage would cost the U.S. economy two million jobs over the long term.

Out of the two million jobs that would be lost to a $15 minimum wage, 900,000 of the job losses will be concentrated in restaurants, bars and other food services. Notably, these sectors are ones hit hardest during the pandemic. Even so, Democrats are certainly not letting a crisis go to waste, as they are actively pushing for a $15 minimum wage. 

The EPI analysis found that the weight of these job losses will be felt by young workers and women. Other sources have found disproportionate negative effects on ex-convicts, Black/Hispanic workers, and less-skilled/less-experienced workers. This policy would hurt the very people Democrats claim to champion.

A minimum wage increase will also speed up automation. As Economists Grace Lordan of the London School of Economics and David Neumark of UC Irvine explain in their study: “Based on data from 1980-2015, we find that increasing the minimum wage decreases significantly the share of automatable employment held by low-skilled workers.”  

Recently, Americans for Tax Reform led a coalition with 62 groups, activists, and legislators, releasing a letter to members of Congress in opposition to a $15 federal minimum wage. 

Among other points, the letter explains how this law would hurt small businesses:

“Small businesses with thin margins would be forced to pass the costs onto consumers, which could lead to a decline in businesses, a loss of revenue, and layoffs. Businesses that have closed temporarily due to the pandemic may decide not to reopen at all in the face of a higher minimum wage, and many employers will forgo hiring new workers because they cannot afford them.”   

ATR urges members of Congress to support Senator Scott’s amendment to prohibit an increase in the minimum wage from taking effect during the pandemic.