A federal minimum wage hike to $10.10 per hour could cost 500,000 jobs while boosting the earnings of 16.5 million low-wage workers, the nonpartisan Congressional Budget Office found in a new report released Tuesday.
The report sheds light on the complicated economic tradeoff of a minimum wage hike as President Barack Obama — who supports the wage increase — simultaneously grapples with stubbornly high jobless rates and stagnant middle-class incomes.
“Once fully implemented in the second half of 2016, the $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent, CBO projects,” CBO said. “As with any such estimates, however, the actual losses could be smaller or larger; in CBO’s assessment, there is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduction in employment of 1.0 million workers.”
It’s not all bad, though, for one of the centerpieces of Democrats’ middle-class agenda ahead of the November congressional elections.
“Many more low-wage workers would see an increase in their earnings,” the budget office concluded. “Of those workers who will earn up to $10.10 under current law, most—about 16.5 million, according to CBO’s estimates—would have higher earnings during an average week in the second half of 2016 if the $10.10 option was implemented.”
CBO also projected that the federal wage hike would lift 900,000 workers out of poverty, estimating that 45 million workers will be below the poverty threshold in 2016. The report also said some workers currently earning just above $10.10 per hour would enjoy higher earnings as a result of a wage hike.
House Speaker John Boehner (R-OH), who opposes an increase in the minimum wage, pounced on the CBO report to attack the idea as a job-killer.
“This report confirms what we’ve long known: while helping some, mandating higher wages has real costs, including fewer people working,” said Brendan Buck, a spokesman for Boehner. “With unemployment Americans’ top concern, our focus should be creating – not destroying – jobs for those who need them most.”
House Minority Leader Nancy Pelosi (D-CA) said, “No matter how the critics spin this report, the CBO made it absolutely clear: raising the minimum wage would lift almost one million Americans out of poverty, increase the pay of low-income workers by $31 billion, and help build an economy that works for everyone. … It’s time to give America a raise.”
White House senior adviser Dan Pfeiffer mocked the GOP response to the CBO report.
The logical extension of the GOP position on today’s CBO report would be to call for lowering the minimum wage –> lots of jobs at $2/hr
— Dan Pfeiffer (@pfeiffer44) February 18, 2014
CBO also studied a related proposal to raise the minimum wage to $9 per hour, which Obama supported last year before coming out more recently for congressional Democrats’ $10.10 per hour idea.