LOUISVILLE, Ky. (WDRB) -- U.S. Sen. Mike Braun, R-Indiana, met with restaurant owners in Indianapolis on Wednesday to talk about raising the minimum wage.
Right now, servers in Indiana make $2.13 an hour, which is more than $5 less than the standard minimum wage of $7.25, because servers' pay also includes tips.
If an employee doesn't make enough in tips to reach minimum wage, the employer has to make up the difference.
Opponents of a higher minimum wage fear it would eliminate the tax credit for restaurants. Businesses enjoy the tax credit because it lets them count an employee's tip toward their own pay. If menu prices were to go up, owners fear there would be fewer people dining out, resulting in layoffs and closures.
Heather Boushey, a member of the White House Council of Economic Advisors, said higher minimum wages would circulate more money through the economy, enhancing the buying power of all workers at the bottom of the country's pay scale.
"When you raise the minimum wage, it increases the amount of money that those folks have and can spend in their community, it improves family common earnings, earning income, and at the same time, we have not seen large effects on employment," Boushey told Fox 59 News.
But Braun disagrees.
"This would force probably the loss of over 1 million jobs, many of them in the restaurant industry already hard hit," he said. "It doesn't reflect the marketplace."
Earlier this month, a nonpartisan Congressional Budget Office estimated that while raising the minimum wage to $15 by 2025 would increase pay for 17 million workers and pull 900,000 out of poverty, it would also end 1.4 million jobs with employers cutting positions to make up for higher labor costs, according to a report by The Associated Press.
However, some economists have concluded that "the impact to employment, positive or negative, would be minimal, while the social benefits to lifting real wages of lower-income earners and millions out of poverty are substantial," the AP reported. Those economists also say a minimum wage increase would also help narrow the chronic economic gap between white Americans and Black and Hispanic Americans.
Advocates for a higher minimum wage argue the increase at the bottom of the pay scale would help relieve income inequality, including racial disparities in earnings. Critics, on the other hand, say the timing isn't right to raise the minimum wage, as many of the businesses most likely to pay its employees minimum wage have been hardest hit by the coronavirus pandemic — including restaurants, hotels and movie theaters.
Braun told restaurant owners that while he expects President Joe Biden's proposal to raise the minimum wage to $15 will pass the House, he doesn't expect it to pass in the Senate.
The last time the federal minimum wage was increased was in 2009 to the current $7.25, which would be about $8.80 in 2021 when adjusted for inflation. Twenty-nine states and Washington, D.C., have already implemented higher minimum wages.
Copyright 2021 WDRB Media. All Rights Reserved. The Associated Press also contributed to this report.
