Kamala Harris blasts America’s current minimum wage as 'poverty’ pay — says she'd support $15/hour but it must ‘go through Congress’ first. Would the bump really help US workers?

The minimum wage debate

Increasing the minimum wage would have complex implications for the U.S. economy and would create wealth — while also driving up prices, the Congressional Budget Office (CBO) found.

If the U.S. raised the minimum wage to $15 per hour by 2025, for example, the country would lift an estimated 900,000 people out of poverty and raise the income for 17 million employees (roughly 1 in 10 American workers) — but it would also reduce employment by 1.4 million and increase the deficit by $54 million within 10 years, the CBO explained.

Fewer Americans would have to rely on food stamps if the minimum wage was increased, which would help drive down nutrition program costs and increase overall federal revenue.

However, the costs of goods and services would likely rise in the long term, leaving businesses with less money to employ people.

In the short term, the opposite would happen: “Because increasing the minimum wage would shift income toward families with lower income, it would boost overall demand in the short term,” the CBO said.

Health care costs, in particular, would climb because many health care workers currently make the minimum wage — and that, in turn, would drive up federal government spending.

The U.S. budget deficit would climb by $54 billion by 2031 in large part because the government would have to pay health care workers a higher wage through Medicare and Medicaid.

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State by state

The U.S. minimum wage varies widely across the country, and 30 states — including the District of Columbia — have a higher minimum wage than the federal rate of $7.25 per hour.

However, some states mandate wages below the federal minimum level, while others have no state laws at all.

An annual Financial Freedom Survey found that Americans believe they need to earn an average of $186,000 a year to live comfortably. This would suggest that the minimum wage is currently too low for people to depend on it.

Federal district, Washington, D.C. ($17.50), Washington ($16.28), and California ($16), have the highest minimum wages in the country.

The nation’s capital has bumped up its minimum wage by roughly $0.50 to $1 every year since 2013, and in that time unemployment has fallen, according to the Federal Reserve.

Meanwhile, Washington increased its minimum wage annually starting in 2016 and has seen similar declines in unemployment over the same period.

California has seen the most dramatic fall in unemployment out of the three highest-paying states, after raising its minimum wage by a dollar every year or two since 2013.

When the state’s $20 minimum wage for fast-food workers took effect earlier this year, Gov. Gavin Newsom cited data from the Bureau of Labor Statistics when lauding its success.

“Since the law was enacted, California has added 11,000 new jobs in the industry. As of July, our state boasts a historic 750,500 fast food jobs,” he wrote in an op-ed for Fox News.

Only employers subject to the Fair Labor Standards Act (FLSA) are required to pay the federal minimum wage.

An employer can pay below the federal minimum wage unless a state has its own law on employee compensation. For example, businesses making less than $500,000 per year are not subject to the federal minimum wage.

Georgia and Wyoming both have a state minimum wage of $5.15 per hour, however, employers covered by the FLSA must adhere to the federal requirement of $7.25.

States with no minimum wage for non-federally covered employees are Alabama, Louisiana, Mississippi, South Carolina, and Tennessee.

In the end, increasing the minimum wage will likely prove difficult to pass through Congress as many may find the cons — the effects on small businesses and the overall economy — far outweigh the pros.