The Bottom LineThe Bottom Line

Economics in Brief: Congress Tries Again to Raise the Minimum Wage

Also: NYC raises cap on street vending permits, and the Federal Reserve starts a climate committee.

Protestors rally for a $15 minimum wage in Minneapolis on April 15, 2015, as part of a nationwide action to demand a $15 minimum wage. Two years later, Minneapolis voted to raise the minimum wage to $15.

(Photo by Fibonacci Blue / CC BY 2.0)

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Congress Tries Again to Raise the Minimum Wage

The Raise the Wage Act of 2021 has been introduced in both houses of Congress. The act would increase the federal minimum wage to $15 an hour by 2025 and phase out the tipped worker minimum wage of $2.13.

The nonpartisan Economic Policy Institute (EPI) notes that the federal minimum wage has not changed for a decade — the longest it has remained the same since the minimum wage was established in 1938. According to the EPI, the increase would affect some 32 million workers, representing 21% of the U.S. workforce. Not only would the change overwhelmingly benefit essential workers, it would work to close the racial wealth gap; EPI says that 31% of Black workers and 26% of Latino workers would get a pay raise if the higher minimum wage takes effect.

The “Fight for $15” began in 2012 when hundreds of New York City fast-food workers walked off the job. Since then, cities and states have passed wage increases that had, by 2018, resulted in a collective $68 billion raise for low-wage workers, New York Magazine reported at the time. But the push for a federal minimum wage increase has stalled over the past nine years.

According to inflation calculators, the $15 that activists were pushing for in 2012 will be worth about $10 (in 2012 dollars) by 2025. Or in other words, the minimum wage in 2025 would need to be $19 to match the buying power of the $15 that was demanded when this push began in 2012.

New York City Council Votes to Raise Cap on Licensed Street Vendors

There is a 1,500-person waiting list for the 3,000 street vendor permits in circulation in New York City. The City Council voted to approve raising that cap and adding 4,000 permits over the next decade. Eater NY reports.

Critics of increasing the number of street vendors cite sidewalk congestion and litter, as well as competition with restaurants, as a reason not to add more permits. But 2018 research by Pratt Institute graduate student Kathryn “Kurt” Wheeler found that street vendors often operate “symbiotically” with storefront businesses.

The Street Vendor Project, an advocacy group for food-cart operations, told the New York Post that lifting the cap would help to dissolve the black market where permits can be sold for upwards of $20,000. Eater NY adds that the new bill will also require the license holder to be present at their carts while in operation, a move intended to eliminate the black market.

Fed’s New Climate Committee to Study Impacts of Climate Change on Financial System

The Federal Reserve has convened a climate committee to study the risks climate change poses to the financial system, E&E News reports.

The Fed for the first time acknowledged climate risks in its Financial Stability Report in November, E&E said. In that report, the central bank wrote: “Climate change, which increases the likelihood of dislocations and disruptions in the economy, is likely to increase financial shocks…” It went on to describe how homes and businesses in areas likely to experience more severe storms could lose their value, which would have ripple effects throughout the economy as people or businesses default on mortgages, the value of mortgage-backed securities plummets, and so on.

Kevin Stiroh, who currently leads the New York Fed’s supervisory work, will chair the committee, E&E writes. Stiroh has been outspoken about climate risk: Last year, in a speech at Harvard Business School, he said that climate impacts “will be felt across business sectors and asset classes, on strategies and operations, and through the balance sheets and income statements of financial firms.”

This article is part of The Bottom Line, a series exploring scalable solutions for problems related to affordability, inclusive economic growth and access to capital. Click here to subscribe to our Bottom Line newsletter.

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Tags: new york cityclimate changeminimum wagestreet vendorsfederal reserve

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