Joe Biden at a CNN town hall at the Pabst Theater in Milwaukee, Wisconsin, February 16, 2021.
SAUL LOEB/AFP via Getty Images
  • At a town hall on Tuesday night, US President Joe Biden discussed a minimum wage increase.
  • Biden reiterated his support for a $15 minimum wage, and stressed an increase would be gradual.
  • This increase is currently included in Biden's $1.9 trillion stimulus package.
  • The effect would be the equivalent of a R35,000 minimum monthly salary for any full-time worker in America.
  • Visit Business Insider South Africa for more stories.

In his first presidential town hall, US President Joe Biden again signalled his support for a minimum wage that would, in South African terms, equate to R35,000 per month.

Biden was questioned by a business owner, who expressed concern that American businesses in areas with a low cost of living would have to shutter if the country's minimum wage went up. 

Biden said it's "not illegitimate" for small businesses to worry about the impact of increasing the minimum wage in one "fell swoop," but that he still supports the raise. He said he believes it would have both medium- and long-term benefits for both small and big businesses. 

He also said "there are studies that show that by increasing the minimum wage to $15 an hour, it could have an impact on a number of businesses but it would be de minimis" - and he stressed the importance of implementing the raise gradually.

See also | Geneva is introducing a minimum wage of R820,000 per year for full-time workers

$15 an hour is the equivalent of R220, or just under R1,800 for an 8-hour workday – and a little over R35,000 for 20 such days in a month.

An incremental increase

The American minimum wage would be increased under the aptly named Raise the Wage Act of 2021, which is currently being considered as part of Biden's $1.9 trillion stimulus package. It would increase the federal minimum from its current rate of $7.25 to $15 by 2025; tipped and sub-minimum wages would also incrementally increase to the standard federal minimum.

US Democrats are looking to pass the measure through reconciliation, which requires only 51 votes and may have become more viable in recent days.

Researcher Yannet Lathrop of the National Employment Law Project previously told Insider that incremental increases make sense, as the Act would more than double some states' minimum wages.

"If the wage in those places was closer to $15, I think it would make a lot more sense to do it in one or two steps, but a gradual approach is probably better so that businesses have a chance to adjust to the higher wages," she said.

See also | All the new minimum wages in SA – with big increases for domestic workers

Biden also said that if that $7.25 minimum wage had been indexed to inflation since America adopted it, the minimum US wage today would be around $20 an hour (close to R300 an hour, and equivalent to around R47,000 per month).

When asked about a recent Congressional Budget Office (CBO) report that projects a $15 minimum wage would cost the country 1.4 million jobs, Biden said several other economic studies have suggested less of a negative impact on employment.

Several economists have offered critiques of the CBO's job loss projections. Arindrajit Dube, a professor of economics at University of Massachusetts, Amherst, previously told Insider that he found the projections "pessimistic," and the Economic Policy Institute released its own blog post discussing the report's projections

"We're at $7.25 an hour. No one should work 40 hours a week and live in poverty," Biden said.

After a 4.5% increase this year, South Africa's minimum age is at R21.69 per hour, currently equal to $1.48 per hour. 

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