Economy

CBO: $15 Minimum Wage Would Kill Millions of Jobs

CBO: $15 Minimum Wage Would Kill Millions of Jobs”

As Common Dreams reported last week, a far-reaching study by economists at the University of California, Berkeley found that raising the federal minimum wage to $15 an hour by 2024 would result in "substantial declines in household and child poverty" without any negative impact on employment or hours worked, even in low-wage states. 29 states and Washington, DC have enacted state-level minimum wages that are higher than the federal one, according to data from the US Department of Labor. However, says CBO, it will also trigger a median 1.3 million workers to lose their jobs as employers can not afford the wage - that's a 0.8% reduction of the variety of employed workers. For a full-time minimum-wage worker employed year-round, that represents a loss of $3,000 in annual earnings.

"The Congressional Budget Office examined how increasing the federal minimum wage to $10, $12, or $15 per hour by 2025 would affect employment and family income", the CBO report said. "All consumers would pay higher prices, but higher-income families, who spend more, would pay more of those costs". The effects, according to CBO, "would generally accrue to families in proportion to their income, which means they would largely be absorbed by families with income well above the poverty threshold".

Real income for consumers would decrease by $39 billion.

"As a result", Shierholz added, "policymakers must be skeptical of their assessment of the employment impact, given that other careful reviews of the minimum wage literature have shown that the average study finds small-to-no employment effects of minimum wage increases". An increase to $10 an hour would give a raise to 1.5 million workers and would have "little effect on employment".

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"Every time a minimum wage increase has been proposed, the extreme right wing and their billionaire campaign contributors claim that jobs will be destroyed". Arindrajit Dube, one of the researchers, noted in a tweet Monday that the study "specifically show [s] how a variety of past studies went wrong ... Raising the minimum wage would really narrow gender and racial balance of inequality".

According to the nonpartisan @CBO, the Dems' plan to increase the federal minimum wage to $15 per hour would put millions of Americans out of work. That part of the CBO estimate is not being disputed. And the weight of current research indicates that CBO's estimate for job losses is overstated. It's a position mirrored by House Democrats, who have introduced a bill sponsored by Rep. Bobby Scott of Virginia that would phase in a $15 minimum wage over the next five years and tie future increases to inflation. Almost 40 million Americans are forecast to see an increase in their incomes if the bill is passed by the House, the Senate and signed by the president.

"If House Democrats were uneasy about voting on $15 before this week, the CBO report should have them terrified", Ms. Summers said in a statement.



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