$15 minimum wage would boost pay for 17 million but 1.3 million would lose their jobs, CBO says
$15 minimum wage would boost pay for 17 million but 1.3 million
would lose their jobs, CBO says
Jacob Pramuk Mon, Jul 8 2019 5:46 PM EDT
Key
Points
· Raising
the federal minimum wage to $15 per hour by 2025 could boost pay for 17 million
people, according to Congressional Budget Office estimates.
· It
could also cause 1.3 million people to lose jobs.
· House
Democrats could vote on a plan to hike the federal minimum wage to $15 per hour
later this month.
Hiking the U.S. minimum wage to $15 per hour would
give millions of Americans a raise but put a smaller share of people out of
work, according to projections released Monday.
Raising the pay floor to $15 per hour by 2025 would
boost wages for 17 million workers, the nonpartisan Congressional Budget Office
estimated. At the same time, 1.3 million people would lose jobs, according to
the CBO projections.
Earlier this year, House Democrats led by Rep.
Bobby Scott, D-Va., introduced a bill to gradually
raise the federal minimum wage to $15 per hour by 2024. The party
has argued that doing so would lift workers out of poverty and kick-start
economic growth.
Opponents of hiking the pay floor to that level —
more than twice the current U.S. minimum wage of $7.25 that took effect in 2009
— argue it would cut positions for minimum wage workers amid higher costs.
The
House could vote on the Democratic legislation, called the Raise the Wage Act,
later this month. It is expected to pass, though the GOP-held Senate likely
will not take it up. President Donald Trump could also oppose it.
Though the bill may not become law, Democrats view
it as a way to portray themselves as better for the working class than
Republicans as the 2020 elections approach. Every major Democratic candidate
for president has endorsed a $15 per hour minimum wage. More than 200 House
Democrats — including many who will face competitive reelection bids next year
— have backed the bill.
“What the report makes clear is that the benefits
vastly outweigh any cost,” Scott told reporters on a call Monday. He said he
feels “confident” the House has the votes to pass the bill when it votes this
month.
Twenty-nine states and Washington D.C. have higher
minimum wages than the federal level of $7.25. Seven states have also passed
$15 per hour wage floors.
Here are the estimated effects of hiking the
federal minimum wage to $15 per hour, according to CBO projections:
· 17 million U.S.
workers who would otherwise make less than $15 would get a raise. Another 10
million Americans “otherwise earning slightly more” than $15 an hour may also
see a wage hike, according to the CBO.
· The pay
increases would take the annual income of 1.3 million people above the poverty
level.
· It would result
in 1.3 million more jobless Americans, according to the CBO. Both Scott and
Heidi Shierholz — chief economist at the Labor Department during part of the
Obama administration — argued the CBO’s methods in assessing job losses were
flawed. Shierholz said she believes the CBO “substantially overstates the
costs” of hiking the minimum wage.
· Hiking the pay
floor would “reduce business income and raise prices” as companies pass on
higher labor costs to consumers, the CBO said. It would also “reduce the
nation’s output slightly” a decline in capital such as buildings and machines,
the nonpartisan agency said.
· The wage
increases would cause total real family income — adjusted for inflation — to
fall by 0.1%.
· The CBO also
assessed the potential effects of raising the minimum wage to both $12 and $10
per hour by 2025. Both hikes would have similar, but more muted, effects on
wages and employment.
Democrats have tried for years to raise the federal
minimum wage. The U.S. pay floor has not budged in a decade. But some
disagreements have emerged over what the appropriate minimum wage is and how
quickly to increase it.
Some center-left Democrats representing lower-cost
parts of the country hesitated to back a $15 per hour U.S. minimum wage. In
part to appease those concerns, Rep. Tom O’Halleran, D-Ariz., and Rep.
Stephanie Murphy, D-Fla., proposed an amendment to Scott’s bill that would
require a Government Accountability Office report on the effects of the minimum
wage increases.
Under that amendment, the GAO would prepare a
report after two of the minimum wage hikes took the federal pay floor to $9.85.
House and Senate committees could then make recommendations on changes to
reduce any negative effects from the pay increases.
Comments
Post a Comment