This article originally appeared on Real Clear Markets on October 29, 2020.
In the presidential debate last Thursday, moderator Kristen Welker asked former Vice-President Joe Biden if it was the “right time” to ask “struggling small businesses” to raise the minimum wage to $15 an hour. It was a good question and each of the candidates’ responses said a lot about how they view government’s role in our economy.
Demonstrating that the government clearly has an important role to play in a national crisis, Republicans and Democrats came together early in the pandemic and passed the CARES Act. It included the Paycheck Protection Program which provided financial assistance to small businesses so they could keep their employees on their payrolls. It wisely did nothing to increase the costs of retaining those employees as it makes no sense to aid businesses on the cusp of failure and simultaneously increase the costs of their staying in business.
Biden seems to have missed that point. He told Welker that he was in favor of increasing the federal minimum wage to $15 but that “the government is going to have help small businesses by bailing them out.” So, Biden would add to the problems small businesses are facing during the pandemic by increasing their labor costs and then provide government dollars to solve that problem, assuming he could reach agreement on a bailout package with a dysfunctional Congress.
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