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White House Economic Adviser Overstates Number of Minimum Wage Earners

CBO has estimated wage hike could cost as many as 500,000 jobs

White House National Economic Council Chairman Gene Sperling / AP
• March 4, 2014 6:05 pm

A top White House economic adviser and three Democrats on a conference call touting the president’s minimum wage hike could not identify how many workers actually earn the minimum wage.

Director of the National Economic Council Gene Sperling demurred when asked by a reporter how many workers actually earn $7.25 per hour. After a brief interlude, Sperling returned to the call, saying that "5 percent" of American workers earn the minimum wage. That figure, however, overstates how many workers earn the wage. The Bureau of Labor Statistics report often cited by the White House states own talking points state that only 3.6 million out of the nation’s 104.8 million workers earn the minimum wage, about 3.4 percent.

Sperling went on to say that the large hike "will not have any negative economic impact at all" while increasing wages for millions of Americans.

Trinity University Economist David MacPherson, whose research on the minimum wage has been cited by the Congressional Budget Office and multiple academic journals, disputed Sperling’s statement.

MacPherson agreed with a CBO report that concluded that the $10.10 wage might eliminate 500,000 jobs.

"To say that there will be no job losses, that’s ludicrous," MacPherson said. "They’ll try and spin all the positive and ignore all the negatives. They’re clearly being very ideological."

The call came as President Barack Obama prepares to visit Central Connecticut State University on Wednesday to tout the merits of the 40 percent increase. More than 70 percent of Connecticut residents support the wage hike, according to a Quinnipiac poll.

"Connecticut is leading the charge on giving workers the raise they deserve," Rep. Rosa DeLauro (D., Ct.) said. "It’s time for the nation to follow Connecticut’s lead and get it done."

The state plans on raising the minimum wage to $9 per hour in January 2015 and Democratic Gov. Dannel Malloy is pushing for a $10.10 wage at the state level as he heads into a re-election campaign.

Many Connecticut business owners are critical of the push to increase costs.

Andy Markowski, state director for Connecticut’s National Federation of Independent Business, said that the wage increase would place more strain on local businesses, which already face some of the highest tax rates in the country.

"Business owners understand the implications of artificially increased wages. Most pay more than the minimum wage; those that do, do so for entry-level positions or because they can’t afford it," Markowski said. "This would further make Connecticut an economic outlier."

Sperling dismissed the idea that Democrats are using the minimum wage as an election year issue.

"If people don’t think this should be a political issue [then] pass it right now," he said.

Malloy’s wage hike attracts 70 percent support, but 46 percent say he should not be re-elected. He is running neck-in-neck with Republican frontrunner Tom Foley, despite the fact that Democrats outnumber Republicans nearly two-to-one in the state.

MacPherson said that there is a disconnect between the political class and the general public on the issue and that the White House’s insistence that the minimum wage carries no economic burdens on businesses could come back to hurt Democrats the way Obama’s push for healthcare reform did.

"I can see the appeal of increasing the minimum wage from a politician, but it’s like a tax on private sector businesses," MacPherson said.