Compensation CBO Gives Mixed Verdict on $15 Minimum Wage

Marco Green
July 10, 2019

"Every time a minimum wage increase has been proposed, the extreme right wing and their billionaire campaign contributors claim that jobs will be destroyed".

New York Magazine's Eric Levitz argued Monday that the CBO analysis leaves congressional Democrats with no good reason to stop short of a $15 federal minimum wage. 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.

According to the CBO, a $15 minimum wage would amount to an average increase of 5.3% in income for families below the poverty threshold, lifting, on net, roughly 1.3 million people out of poverty. The pay increase would also move the annual income of 1.3 million people above the poverty level.

Michael Saltsman, managing director of the pro-free market Employment Policies Institute, notes that contrary to popular thought, the Raise the Wage Act of 2019 would lower family income. The CBO refers generally to contradictory studies that "have found little or no effect of minimum wages on employment, but many others have found substantial reductions in employment". CBO highlights two: the kind of wage growth that might occur before the proposal took effect, and the lack of unanimity in the research literature on the effects of minimum wage increases.

America's minimum wage has remained at $7.25 an hour since July 24, 2009, when Democrats last controlled the House, though 29 states and several cities have set their minimum wage above that level.

"I've worked for minimum wage and I was once a young single dad raising my son and having to balance work, family life and a checkbook". 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. "The bottom line is the benefits exceed the costs". "That is unacceptable-one job lost is one too many". She also argued that the CBO's findings on job losses were overstated. "This means that even if employment does decline as CBO predicts, workers who work less can still come out ahead because they earn much more when they are working".

Though the Raise the Wage Act has over 200 Democratic sponsors in the House and is backed by almost 75 percent of Democratic voters, so-called moderates have attempted to derail the bill by pushing for a "regional wage" adjusted to local living costs, arguing that a $15 minimum would lead to job losses in low-wage states.

On the other side of the debate, Alfredo Ortiz, president and CEO of the Job Creators Network, an Atlanta-based small-business coalition, said that the report "confirms what we already know to be true-broadly raising the minimum wage to $15 an hour will reduce employment opportunities and is bad for business". That's the biggest time lapse since 2007 when the wage hadn't risen since 1997.

Other reports by Click Lancashire

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