CBO: Minimum Wage Hike Could Eliminate Millions of Jobs

Dems seek to vote $15 minimum wage bill before August

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July 10, 2019

The Congressional Budget Office estimates that Democratic legislation raising the minimum wage to $15 an hour could eliminate millions of jobs even as it increases wages for 17 million workers.

The non-partisan budget watchdog issued the report Monday, as House Democrats seek to vote on the Raise the Wage Act of 2019 before August. The bill would raise the federal minimum wage to $15 by 2025, more than double the $7.25 hourly rate.

The CBO study found the bill would raise wages for 17 million workers and lower the number of people with an annual income below the poverty threshold by 1.3 million in 2025. However, it also calculated the bill would cost a median estimate of 1.3 million Americans to lose their jobs, with upper estimates showing up to 3.7 million potential layoffs. Additionally, a $15 minimum wage would reduce total real income by about $9 billion in 2025.

Michael Saltsman, managing director of the pro-free market Employment Policies Institute, notes that contrary to popular thought, the Raise the Wage Act of 2019 would lower family income. He said the cost of the legislation would hurt the groups that it intends to help by reducing their ability to enter the workforce.

"Only in Washington could a political party rally behind a mandated ‘raise’ that reduces pay for so many," Saltsman told the Free Beacon. "Based on the CBO's conclusion of a $9 billion reduction in real family income, Democrats should change their bill's name to the Reduce the Wage Act. Lifting 1.3 million workers out of poverty at the expense of up to 3.7 million jobs is a terrible trade-off, and the CBO has done a service to the country by saving it from these consequences."

Anthony Advincula, spokesman for the Restaurant Opportunities Center, a non-profit worker center, said the CBO report shows that the benefits of the proposed bill outweigh its potential costs, which he says are "substantially overstated." He said the job loss estimates rely on "old methodologies" that link legislative mandated wage hikes to job losses. He said the goal of the legislation to is narrow "inequality," particularly for women and minorities.

"This is about workers, their lives and their families's lives," Advincula told the Washington Free Beacon. "What's being left out is the positive things [about the bill]. Raising the minimum wage would really narrow gender and racial balance of inequality."

Rep. Donald Norcross (D., NJ), a member of the House Education and Labor Committee, said a $15 minimum wage will encourage workers to spend more and become less reliant on the government. Norcross, a career electrician and former union official, said increasing individual pay hikes is the best way to give "working families a fair shot."

"I've worked for minimum wage and I was once a young single dad raising my son and having to balance work, family life and a checkbook. Back then it was hard. Today, for far too many Americans, it's nearly impossible," Norcross said in a statement. "I encourage anyone who is opposed to raising the minimum wage to try living off $7.25 an hour. You just can’t."

Industry groups said the CBO data reinforced the evidence of the economic harm that would come from mandating the same wage rates in Mississippi as one finds in New York City. Sean Kennedy, executive vice president of public affairs for the National Restaurant Association said the proposed bill would disproportionately hurt women in the workforce.

"CBO's analysis notes that the $15 wage bill pending in Congress could trigger elimination of as many as 3.7 million local jobs, the majority of which are held by women," Kennedy said in a release. "We need a common-sense approach to the minimum wage that reflects the economic realities of each region, because $15 in New York is not $15 in Alabama."

Matthew Haller, spokesman for the International Franchise Association, said that the proposed bill will not only negatively impact workers who would be laid off in response, but will hurt Democrats in the 2020 election.

"If you're a freshman Democrat sitting in one of the 31 districts President Trump won in 2016, you're already swimming uphill win your reelection efforts, notwithstanding the possibility of Bernie Sanders or Elizabeth Warren as your standard bearer in 2020," Haller told the Free Beacon. "The last thing you needed was an independent budget analysis confirming to your constituents that a vote to more than double the starting wage at the local diner in your community will eliminate up millions of jobs and wipe out the economic gains of the last decade."

The legislation has cleared committee and Democrats have pledged to bring the bill for a floor vote by August.

Published under: CBO , Minimum Wage