Workers repair glass on the Eastern Front rotunda doors that was damaged during the February 6, 2021 attack on the U.S. Capitol in Washington, DC on January 6th.
Tasos Katopodis | Getty Images
LONDON – The US should come up with a plan to increase its federal minimum wage in order to achieve a fuller recovery from the coronavirus crisis, the Organization for Economic Cooperation and Development said on Wednesday.
President Joe Biden plans to raise the minimum wage for federal employees to $ 15 an hour, and an executive order for that could come in a few weeks. This is vital, according to the OECD, to support low-income earners who are harder hit by the pandemic.
“In several advanced economies, the pandemic and ongoing changes in the labor market have brought the issue of minimum wages to the fore,” the OECD said in its Going For Growth report released on Wednesday.
“This is particularly the case in the US, where raising the federal minimum wage is a top priority. Recent evidence suggests that raising the minimum wage to 59% of the median wage has little negative impact on employment,” said Paris -based institution said.
“Raising the federal minimum wage would both incentivize participation and help reduce income inequalities,” he added.
The US minimum wage has been $ 7.25 an hour since 2009. Small business owners have stated that the wage increase plan would be a burden at a difficult time.
On the flip side, some labor rights groups have argued that Biden should do more, including increased protection for people with disabilities and better enforcement of workplace rights, to reduce discrimination.
The OECD also said the United States should continue to improve labor market conditions.
This would mean promoting worker mobility, offering more training programs and reducing the bureaucratic burden for people with previous convictions wishing to obtain a professional license.
“We have to make our economies more resilient, we have to make them more inclusive,” Laurence Boone, chief economist at the OECD, told CNBC on Wednesday.
She added that it is important “to focus on the people who are left behind”.
The United States will grow at a rate of 6.4% this year, according to forecasts by the International Monetary Fund. This means it is on track to exceed pre-pandemic GDP this year.
However, new labor market friendly measures could limit the scarring effects of the crisis and lead to more employment.