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Congressional Budget Office Says Minimum Wage Hike Could Kill Jobs

President Barack Obama and congressional Democrats plan to make raising the minimum wage a key issue in the 2014 midterm elections, claiming it will help many low-income families. However, a report released by the nonpartisan Congressional Budget Office says that doing so may lead to job losses throughout the economy, according to a story in USA Today.

The president’s initial push was to raise the federal minimum wage from $7.25 an hour to $9, but he has since joined with Senate Democrats who want to raise it to $10.10. Such a hike could cost 500,000 jobs, says the CBO.

“The increase in the minimum wage would have two principal effects on low-wage workers,” the report is quoted as saying in the Washington Post. “The large majority would have higher wages and family income, but a much smaller group would be jobless and have much lower family income.”

An increase to $10.10 would affect about 16.5 million workers and pull some 900,000 families above the poverty line, says the report. The CBO points out that the numbers on job losses in the report are estimates and that the actual number could be “very slight” or as high as one million.

Republicans, zeroing in on the high numbers, sought to take away a top issue from the Democrats.

“Today’s CBO report shows that raising the minimum wage could destroy as many as one million jobs, a devastating blow to the very people that need help most,” Senate Minority Leader Mitch McConnell, R-Ky., said in a statement.

The report put the Obama administration on the defensive. Chief economist at the White House, Jason Furman, downplayed the seemingly more dire conclusions of the report. In a conference call with reporters he said, “estimates do not reflect the overall consensus view of economists, who have said the minimum wage would have little or no impact on employment.”

While a minimum wage increase may likely pass the Democrat-controlled Senate, it is unlikely to get through the GOP-controlled House of Representatives. 

Going into the November midterms, Democrats have already decided it is an important, and likely safe, issue. A recent poll conducted by the Washington Post and ABC showed there is support for such an increase among two-thirds of voters. But Democrats may need to tread lightly following the CBO report, as an increasing number of voters become concerned about jobs. A Gallup poll this month said nearly 25 percent of voters mentioned unemployment. That number is up from 16 percent a month ago, said the Washington Post.

Sources:  USA Today, Washington Post


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