Earlier this month the Democratically controlled U.S. House of Representatives passed the “Raise the Wage Act,” which calls for an increase of the federal minimum wage to $15 per hour by 2025. The current federal minimum wage is $7.25 and has not been increased in a decade.
This bill has many obstacles, one is a Republican controlled U.S. Senate and the other is President Donald Trump, but there have been recent studies that show that the increase would not harm job growth in lower-income areas, like some contend and would boost Social Security benefits for Americans. MarketWatch recently published a story contradicting any harmful aspects of a $15 minimum wage. Below are some of the more important points the story makes.
More than doubling the federal minimum wage is quite the controversial proposal currently sitting in Congress, but there’s no debate about one facet of the concept: doing so would boost Americans’ retirement savings.
The House of Representatives recently passed the Raise the Wage Act, which would increase the minimum wage across the country from $7.25 to $15 an hour by 2025. The bill still needs to get approved in the Senate and then by the president.
If a single worker with a life expectancy of 90 were to earn the current minimum wage her whole life, and claimed Social Security benefits at her full retirement age, she would receive a monthly benefit of $924, compared with that same type of worker earning $15 an hour, who would receive $1,337, said Bill Meyer, chief executive officer of software firm Social Security Solutions.
But Social Security benefits can also be calculated cumulatively — that is, the total amount in one’s lifetime. Cumulatively, a worker claiming at 62 after having earned the current minimum wage his whole life would receive $294,000 (assuming a 2% cost-of-living adjustment), and $398,000 if he claimed at 70. But if a worker earned $15 an hour and claimed at 62, he would see $425,000 in lifetime Social Security benefits, and $576,000 if he claimed at 70.
