Minimum wage report puts Democrats on defensive

Nonpartisan budget analysts say a boost of the minimum wage could cost a half-million jobs
Associated Press
Feb 20, 2014

A report by Congress' nonpartisan budget analysts seems to have thrown Democrats onto the defensive after it concluded that the party's drive to boost the federal minimum wage could cost a half-million jobs by 2016.

A Congressional Budget Office report released Tuesday concluded that a gradual increase to $10.10 hourly by that year — which is what President Barack Obama and congressional Democrats are seeking — would increase pay for more than 16.5 million people, mostly those earning low wages. It also would lift 900,000 people over the federal poverty threshold, the study said.

Democrats hailed those findings. But in a congressional election year in which the slow-recovering economy remains a paramount issue, Democrats from the White House to Capitol Hill contested another of the report's conclusions: that the increase would reduce jobs in 2016 by roughly 500,000, or 0.3 percent.

That figure was the midpoint of a range of job losses the budget office estimated at somewhere from negligible to 1 million eliminated positions. And it was an unpleasant number for Democrats, who plan to make their long-shot effort to raise the minimum wage this campaign year a centerpiece of their focus on correcting income inequity between haves and have-nots.

Jason Furman, chairman of the White House's Council of Economic Advisers, and council member Betsey Stevenson referred in a blog post to a statement by more than 600 economists who cited recent academic findings that "increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market."

"There's some respectful disagreement on the emphasis and certainty around that magnitude of employment loss," Furman told reporters of the CBO estimates. He added, "Zero is a perfectly reasonable estimate of the impact of the minimum wage on employment" based on research by other economists.

Among those echoing Furman were Sen. Tom Harkin, D-Iowa, author of the minimum wage bill the Senate plans to debate next month. His measure would boost today's $7.25 standard in three steps to $10.10 by 2016, with annual increases reflecting inflation after that.

Citing "the newest economic research using the most sophisticated methodologies," Harkin said, "since the first minimum wage was enacted more than 75 years ago, opponents have argued that a wage floor would cause job loss. But this is a myth."

Republicans, who long have solidly opposed a minimum wage boost as a job killer, wasted no time in using the budget office report to buttress their case.

"Today's CBO report shows that raising the minimum wage could destroy as many as 1 million jobs, a devastating blow to the very people that need help most in this economy," Senate Minority Leader Mitch McConnell, R-Ky., said.

"With unemployment Americans' top concern, our focus should be creating — not destroying — jobs for those who need them most," said Brendan Buck, spokesman for House Speaker John Boehner, R-Ohio.

The study also examined the impact of boosting the minimum wage to just $9 hourly by 2016, similar to what Obama embraced a year ago, and leaving it at that level afterward. That lesser increase would have smaller effects — about 100,000 fewer jobs, higher wages for 7.6 million workers and 300,000 people lifted out of poverty.

Without any changes in the minimum wage, about 45 million Americans are expected to live below the poverty line in 2016. The budget office estimates that the poverty level that year would be $24,100 for a family of four, less for smaller families.

The report said an increase to $10.10 would add $31 billion to the earnings of low-wage workers.

But it noted that only 19 percent of that increase would go to families earning less than the poverty threshold, while 29 percent would go to families earning more than triple the poverty level. That is because many low-wage earners are not in low-wage families.

In addition, income would decrease by $17 billion for families earning at least six times the poverty level because that group would be affected most by lost business income and price increases.

The report said that besides boosting wages for people earning less than $10.10 hourly, a minimum wage boost to $10.10 would help some people making more than that amount as bosses adjust their pay scales upward.

A minimum wage boost can cost jobs because employers can compensate for their higher wage costs by raising prices. That can prompt consumers to purchase fewer goods and services and, in turn, encourage companies to hire fewer workers, the report said.

A minimum wage increase also encourages some businesses to trim the number of low-paid workers. But the study said the effect can be mixed.

It noted that some companies would react by getting higher productivity from their workers, and some would see savings because increased wages could reduce turnover. Other companies could benefit as increased overall spending on goods and services by low-wage workers boosts demand for their products.

Some workers' incomes would grow as their earnings increase, causing them to pay more taxes. But for others, income would fall — reducing their tax burden — and still others would begin collecting unemployment insurance.

As a result, the budget office said a higher minimum wage would have a negligible impact on federal budget deficits.

 

Comments

Donegan

Dog, Your a liberal and a life long democrat probably been voting for them for all your life. Why are you still a obnoxious beggar wanting other peoples things? The democrats have been a party for almost 200 years now you would think they would have solved the problem by now. Oh yeah they were too busy enslaving people first by chains and now by debt. The have the right to pursue success, Not the right to take other people stuff.

pntbutterandjelly

Ummm...like the corporations who took our jobs to the Southern states then to Mexico and finally overseas? Is that the same people you are referring to or doesn't that count as "taking other people's stuff" but only as Rape and Plunder which is, seemingly, "legal". ???? Or are you referring to the bankers who held our federal government at gun point to bail themselves out of financial crisis they alone created? Is that who you are referring to? Or are they the liars, cheats and thieves on Wall Street who KNOWNINGLY stole trillions from everyday people, municipalities and other countries for their own profit and then single-handedly caused the second greatest economic calamity our country has ever faced? Is that who you are referring to? ??? I am SURE you are NOT referring to all the little people who have supported our country by going to work every day and who are also our military personnel. Are you? I didn't think so.
Thank you as you had me worried there for a second.

jacksonbrowne

Peenut I would LOVE to stop at your business and support you and all of your employees. Tell us all again what business YOU own. You know, the one where you pay all of your employees at least $10+ per hour.

pntbutterandjelly

@Jacksonbrowne: (F.Y.I.) I and my spouse do own 4 small, independent and successful businesses. And...no employees are required. Now...anything more to say? What business do own? How do you constructively contribute to society?

Donegan

PB&J Look who owns those corporations and who is rich, The answer may surprise you. The democrats pander to the poor and workers for votes with a promise of a better day. "Income equality" Has exploded in the last 5 years and Dog and his ilk still claim they are for the workers and poor. The truth is they are for themselves and would love nothing more than to destroy the middle class because they have enough money to make rational decisions without believing in a lifeline that only leads to friends and campaign donors getting rich. Look at those bankers you speak so badly of, Guess who they supported in 2008? Not the Republicans who are for the rich. No they bought the democrats and look at what they got in return. A billion times richer off your dime while your 401k's and penny stocks become worthless. Those little people as you put it who support these maniacs while they see either the same policies or worse ones being pushed through are just as much to blame as those who are actually committing them. After almost 200 years you would think people would learn. There is no such thing as a free lunch, ALL politicians lie and the majority is almost always wrong because the majority is mostly self enamored wantitalls that have no idea about how the world works.
Oh look another 75 billion just went to wall street.

Contango

Re: "Ummm...like the corporations who took our jobs to the Southern states then to Mexico and finally overseas?"

Locals which tend to have the most favorable tax rates and regs.

Capital flows to where it will best be rewarded.

Do you choose investments that will produce low returns?

Again: Who owns the corps.?

jacksonbrowne

Yet you, peenut, and your ilk are in favor of letting more of the illegals come to this country. Then, making them full blown citizens at which time they WILL work for less than their American counterpart thereby stealing jobs legally. Is that what you are referring to?

Steve P

deerdong clearly doesn't WORK, spends his days on the blogs and piddle last experience with government work didn't end so well.

deertracker

Does the P stand for pervert?

Steve P

No, P stands for productive, does deertracker stand for lazy, not working and sucking off the taxpayers?

jacksonbrowne

Why yes it does Steve! lol

kURTje

Haters are out. Figgered since so many here are from The Prometheus Society there would be more valid answers. You 2 geniuses have M any other time. Geeez......

Contango

Re: "Haters are out."

You become what you hate; careful kurt.

kURTje

Better inform yourself on the definition pooh.

Contango

Re: "Better (snip)"

Again: Look in the mirror kk.

Mr. "Govt. Check" Innocent huh? Laughable.

Dr. Information

Funny watching the liberals squirm, word twist and deflect with all this horrible news coming out.

I just sit back and say "told ya so".

OSUBuckeye59

31 of our 50 states already have a minimum wage higher than the federal minimum wage of $7.25/hr. Not necessarily that much higher, but higher still. And btw, I found it interesting how Minnesota is the only state to have a minimum wage, with qualifiers, of $6.15/hour...*LESS* than $7.25/hour. http://jobsearch.about.com/od/mi.... The qualifiers to Minnesota's minimum wage are it can only apply to businesses grossing less than $500k and not engaging in interstate commerce.

In terms of a minimum wage, I propose it's the wrong argument. I think the argument should be at least about a Living wage, namely what's generally defined as the amount required to raise a family on a single wage-earner's salary. But even talking about what should be a Living wage dollar figure is difficult because it would vary at least by State, if not by area or even city. Using Minnesota as an example since their state minimum wage is less than the federal minimum wage, it appears those in Minnesota Government evidently believe those few residents of that State making less than the federal minimum hourly wage are somehow able to do so because Minnesota in general evidently has a lower overall cost of living (shelter, food, etc.).

But sticking to the minimum wage discussion, those in favor of increasing the minimum wage argue that such an increase lifts people out of poverty, helps low-income families make ends meet and narrows the gap between the rich and poor, a gap that as of last April has increased 1000% since the 1950's: http://www.huffingtonpost.com/20.... Considering this gap, is it any wonder CEO's are the majority group arguing against an increase in the minimum wage? But the idea of a min wage increase also has a strong populist appeal, particularly in a nation where discussions about social class, when they are held at all, are nearly always framed in terms of the rich versus the poor. Of course there are those opposed to a min wage increase, aligning with arguments in the AP story how an increase would hurt small businesses, squeeze profit margins, lead to inflation, encourage employers to downsize their staff and increase the cost of goods to the end consumer.

In addition to what I've written above, I truly believe the most important thing to remember is this: even if the min wage is increased, anyone working in a min wage position needs to use it as a stepping stone while he/she in parallel is working on a plan to earn greater income through one of several avenues such as obtaining a degree that will lead to a greater income career or working as a trade apprentice or starting a new business. The belief of those in minimum wage positions that they should be able to live for any sustained length of time working in a min wage position is, IMHO, a fallacy.

The Hero Zone's picture
The Hero Zone

Thank you. Comments like this make me wish there was some kind of "fan" button.

Dr. Information

Don't worry. Obama is about to cut Medicare as well.
WASHINGTON – The Obama administration announced Friday cuts were on the table next year for Medicare Advantage, giving new ammunition to critics of the president’s health care law and disappointing some Democrats.

kURTje

It is called service pooh. So you are a taker. btw, 40mill. ready to help Agri-business because of the drought. Pay up & give up your SSI.

Contango

Re: "It is called service (snip),"

You still on active duty or just taking a taxpayer check for playing with yourself kk?

kURTje

Bob Carelton still your hero pooh?

Contango

Re: "Bob Carelton (snip)"

lol

You're flailing.

So why are you a hypocrite and get a taxpayer funded check kk?

Dr. Information

When you serve, no matter the cause, you do not brag about it. kurt served for his own self serving needs. That is pretty apparent after reading over and over again how he served and has no problem using that against anyone making a valid point.

kURTje

You two must be lacking. So neither one of you did anything for your area or country. Yet you think subsidized crooks like Stackhouse & Yost are great. Pathetic. Maybe you two can go to a Ted Nugent concert.

Contango

Re: "You two (snip)"

lol. Still flailing.

Answer the question: So why are you taking taxpayer money for doin' nothing, kk?

Dr. Information

Kurt. I do not know any Stackhouse, except J Stackhouse as in the NBA player. Yost? The guy in the paper? Why must you assume and finger point when you simply cannot directly answer questions.

kURTje

(Yawn) Repeat to pooh but you've always taken things out of context and perverted truth. Dr. we spoken before on matters regarding Willard. The end.

Contango

Re: (Yawn)(snip),"

And you make up lies and nonsense.

Again: Why do you get taxpayer money for nothing?

"Truth"? lol

Why are you afraid to answer the question, kookie?

huronguy

we are waiting for response here!!!!!

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