This is the Kato Daily Podcast for Thursday, February 18th, 2021.

I'm Caleb Brown.

The Biden administration wants to push the federal minimum wage to $15 an hour, but the benefits that would accrue to some workers have to be balanced

against the costs of higher prices, fewer employment opportunities, and other costs that

are largely going to be felt by lower income Americans.

Cato's Chris Edwards and Ryan Bourne comment.

Chris, I want to start with you.

What is Joe Biden proposing with respect to the minimum wage?

Well the current federal minimum wage is $7.25 an hour and

Biden and the Democrats are proposing more than doubling the mandatory minimum rate to $15 an hour phased in over a period of years.

This is a completely unneeded policy initiative.

If state governments want to raise their own minimum wage,

they can anytime, and indeed, 29 states have higher minimums in the federal government. So unfortunately

this federal intervention would cause a lot of damage to small businesses and

entry-level workers and it's an unnecessarily damaging policy

intervention.

Ryan, the Congressional Budget Office says this will reduce poverty and increase unemployment.

What do you make of that assessment?

Well, I think that's a fair reflection of where the general academic literature on this subject is. the thing is with the minimum wage

there are clearly massive massive trade-offs here so on the one hand for those

workers who are lucky enough to maintain their jobs and hours. Of course the companies that continue to employ them

end up paying them a higher wage and for certain people that lifts them out of poverty,

...