CBO Minimum Wage Report Gets Mixed Results, Reactions

The Congressional Budget Office's report on minimum wage estimated a wage increase could lift people out of poverty while putting others out of work.
Posted at 11:32 PM, Feb 18, 2014

A White House-backed proposal to increase the minimum wage could lift nearly one million people out of poverty, while also putting hundreds of thousands of people out of work. 

An estimated 500,000 jobs could be lost if minimum wage rises to $10.10 from $7.25, according to a report released Tuesday by the non-partisan Congressional Budget Office

The report outlines winners and losers under the new proposal; the winners being those 16.5 million low-wage workers that'll see higher earnings. The losers being those half a million people without jobs.

CNN reports the proposal could lead to a 0.3 percent decrease in employment for a number of reasons. "A higher minimum wage raises payroll costs for an employer. That employer may handle those higher costs in any of several ways: cut jobs, reduce worker hours, curb summer hiring, opt not to replace workers who leave; book lower profits; or raise prices on customers."

According to The New York Times, the increase could also add "$5 billion a year more for families living in poverty, $12 billion a year more for families earning from one to three times the poverty threshold."

But the analysis contained in the report is imprecise, so that 500,000 number could be anywhere from a small number to 1,000,000 people out of work — it's an estimate, serving as "both a boon and a burden for businesses and workers." 

Both Republican and Democrats jumped at the opportunity to use the report to support their own stances. Brendan Buck, spokesperson for House Speaker John Boehner, told reporters, "While helping some, mandating higher wages has real costs, including fewer people working. With unemployment Americans’ top concern, our focus should be creating – not destroying – jobs for those who need them most.” (Via Los Angeles Times)

House Democratic Leader Nancy Pelosi highlighted the positives, saying, "​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.” (Via Politico)

But The White House's top economist and Congressional Democrats also called into question the report's credibility, saying the impact of the minimum wage on employment would be closer to zero.

The CBO report also looked at a proposal to raise the minimum wage to $9 an hour, which would result in an estimated loss of 100,000 jobs and increased wages for 7.6 million workers. Politico reports 21 states along with the District of Columbia have already increased their minimum wages above the federal level.