World The Congressional Budget Office says raising the minimum wage to $15 will kill jobs. That's not the whole truth — here's why.
Can Democrats Pass $15 Minimum Wage? Manchin, Reconciliation May Present Problems
"The minimum wage hike, I do not believe, will fit in there at all," Democratic Senator Joe Manchin said.Under Biden's plan, the federal minimum wage would be gradually increased to $15 per hour by 2024. Lawmakers last increased the wage in 2009, raising it to its current level of $7.25 per hour.
- Annie Fadely is the senior policy and programs associate at Civic Ventures and a producer of the podcast.
- She says the Congressional Budget Office's report that a $US15 minimum wage will kill jobs should be more nuanced.
- Fadely cites research indicating that any decrease in employment would be negligible, and well worth it to increase wages.
This week theof the Raise the Wage Act, which would raise the federal minimum wage to $US15 an hour by 2025. The report found raising the wage would have many positive effects, but the email notifications that landed in my inbox focused on the same finding they always do: A minimum wage hike to $US15 an hour would result in 1.4 million lost jobs. Sounds scary â€" especially to minimum-wage workers who lost their jobs in the pandemic.
A $15 federal minimum wage could be on the horizon but economists are mixed on how it may pass and its impact
Democrats are making a big push to increase the federal minimum wage to $US15 an hour. They want to pass the measure without Republican support, through budget reconciliation. Economists are mixed about the raise's potential impact on the economy, especially during the pandemic. Visit the Business section of Insider for more stories. More than a decade since the last federal minimum wage increase, the country could be on track to see more than a doubling of the current rate by the year 2025, but only if Democrats can get the measure passed. As part of President Joe Biden's $US1.
But the actual facts are not so scary. The CBO report shows a $US15 minimum wage would have massive benefits, and there's good reason to be sceptical about the report's scariest, most headline-grabbing findings.
According to, increasing the federal minimum wage to $US15 by 2025 will do a lot of good:
- Lift 900,000 people out of poverty
- Raise income for 17 million people (one in 10 workers), to the tune of $US509 billion over 10 years
- Potentially increase wages for another 10 million people who currently make close to $US15
And they predict, as they have in the past about any minimum wage increase, that it will also have some side effects:
- Reduce employment by 1.4 million jobs
- Increase the federal deficit by $US54 billion over 10 years
- Increase prices for goods and services
These estimates are based on CBO's, which has for being, at different times, "overly optimistic," "needlessly pessimistic," and "disturbingly complacent." And unlike academic minimum wage studies, we can't replicate CBO's findings. As Slate's senior business and economics correspondent Jordan Weissman , "From a wonk perspective, one frustrating thing about this CBO report is that it doesn't actually include all of the information you'd need to figure out exactly how they reached their conclusions."
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Protesters rally in Adelaide's Chinatown district urging better wage protections for migrant workers and international students, after a video showing an alleged assault inside a local business went viral.The rally came after an alleged assault on a worker at Chinatown business Fun Tea last week, which has sparked discussion about alleged wage theft among the international student community.
Bloomberg economy reporterthe "the stuff under the hood" is strange. She points to a that also covered the effects of a $US15 minimum wage, but found a smaller employment impact. That's because, she says, "CBO changed methods" to highlight the average instead of the median, which "skews the number higher, because they're likely including studies that show a much bigger job loss impact."
OK, no problem â€" we'll work with what we've got.
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Job loss and the minimum wage
Let's start with job loss, which CBO said will be 1.4 million jobs. Who knows what methods they used to get there, but it doesn't really matter. There is plenty of existing rigorous research showing the employment impact of raising the minimum wage is negligible, if anything.
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A number of recent studies back this up.of 138 state-level minimum wage changes over four decades found wages and job numbers stayed mostly level. from UC Berkeley found that raising the minimum wage is good for everyone, and did not detect significant negative employment effects.
Also,by UMass economist Arin Dube found that for every 1% increase in wages, there is an associated 0.04% decrease in employment. That's one-tenth the size of CBO's estimate, or as Dube puts it, "quantitatively close to zero." Even David Nuemark, an economist whose research is reliably favoured by conservative politicians, job loss one-quarter the size of CBO's.
So with economists like Dube and Neumark finding relative agreement, how didwith an outlier almost four times as high as conservative estimates?
Economic Policy Institute (EPI) Senior Economist Heidi Shierholz, who was Chief Economist at the Department of Labour under President Obama,"really out there," saying "CBO's employment impacts of the minimum wage from today's report are about 25% higher than they would have been if they had simply used the methods they themselves used two years ago. What is going ON."
Pennsylvania's Tom Wolf Pitches Path to $15 Minimum Wage as Congress Considers National Jump
The governor's proposal starts with an increase to a $12 minimum wage by July and annual raises through 2027.Pennsylvania currently matches the federal minimum wage requirement of $7.25 an hour. Under Wolf's proposal, minimum wage employees would start receiving $12 an hour in July, and the state wage would increase annually until it reaches $15 an hour in 2027.
A cadre of EPI economists and analysts also"the CBO's assumptions on the scale of job-loss are just wrong and inappropriately inflated relative to what cutting-edge economics literature would indicate."
Minimum wage and federal debt
Regarding CBO's suggestion that a $US15 minimum wage would increase the federal deficit by $US54 billion over the next 10 years, recent research directly disputes this claim.a $US15 minimum wage would have a positive effect on the federal budget by $US65.4 billion per year, mostly based on safety net program savings and increased payroll tax revenues.
Finally, CBO says generally that $US15 will raise prices, but doesn't say by how much. Last month, a study from Princeton looked atthat saw nearly 300 minimum wage increases over five years, and found a 10% minimum wage increase led to a 1.4% increase in the price of a Big Mac â€" an unnoticeable increase. And a , two years into implementation, grocery store prices were not affected by Seattle's minimum wage policy.
The CBO doesn't even fully take into account all the society-wide benefits of a higher minimum wage, which are extensive â€" the. And of $US15 have estimated it would actually lift pay for closer to 40 million workers, which is 26.6% of the workforce.
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The Northern Territory's alcohol floor price reduced cask wine consumption without significantly impacting other alcohol sales.On October 1, 2018, the NT introduced a minimum price of $1.30 per unit (equivalent to 10 grams of pure alcohol or one standard drink) on alcohol, in a bid to tackle problem drinking.
Believing the CBO
The question this discussion naturally brings us to now is this: Should we believe the CBO? I think, generally and for the good of the order, that we should â€" but we shouldn't forget that beneath that impressive government entity title are economists and researchers working with imperfect data and imperfect models. They do the public and Congress a great service, but they're only human. And they have.
Even if CBO's estimates are spot-on, a $US15 minimum wage is still well worth it. As Reverend Dr. William J. Barber II, co-chair of the Poor People's Campaign,: "The CBO report makes clear that raising the minimum wage to $US15/hr is key to lifting people out of poverty and the COVID recession. When combined with healthcare, infrastructure investment, and affordable housing, it can reconstruct an economy that works for all of us. The question isn't how much it will cost, but what it costs us not to."
The minimum wage is theright now, adjusted for inflation â€" and increasing it to $US15. The good news is the Progressive Caucus that they had secured the inclusion of a $US15 minimum wage in the House's pandemic reconciliation package, so even after taking the CBO report under advisement, the House came to the conclusion â€" supported by the majority of recent studies â€" that raising the minimum wage is a net good for everyone.
Participatory budget for the region: Val-de-Marne wants cycling and biodiversity .
© LP / Jean Cittone Illustration. Urban agriculture, a major development issue. To your votes! Until March 8, choose the best ecological and solidarity projects in Val-de-Marne. The winners will be funded by the region, as part of its participatory budget, up to € 500 million over five years. Two conditions to vote: live or work in Ile-de-France, and be over 15 years old. Five themes are highlighted this year: biodiversity, cycling, cleanliness, energy and health.