Budget office: Wage hike would lift pay, cost jobs

[Omaha Steve]

Source: AP-Excite

By ALAN FRAM

WASHINGTON (AP) - Boosting the federal minimum wage as President Barack Obama and congressional Democrats are proposing would increase earnings for more than 16.5 million people by 2016 but also cut employment by roughly 500,000 jobs, Congress' nonpartisan budget analyst said Tuesday.

In a report containing ammunition for both supporters and opponents of the Democratic election-year proposal, the Congressional Budget Office said gradually raising the minimum from $7.25 hourly to $10.10 would lift 900,000 people above the federal poverty level by 2016. That is out of 45 million who would otherwise live in poverty without an increase.

But the analysis also noted a down side: About 0.3 percent fewer jobs, higher costs for business owners and higher prices for consumers.

The study was unveiled as the Senate prepares for a March debate on the Democratic plan ramping up the minimum in three steps to $10.10 by 2016. The proposal is backed by Obama and is a keystone of Democrats' campaign-season plans to highlight their effort to make incomes more equitable, but it faces strong Republican opposition and long odds of approval by Congress.

FULL story at link.


Read more: http://apnews.excite.com/article/20140218/DAC1SJ1G0.html

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Statement by AFL-CIO President Richard Trumka on

Congressional Budget Office on Minimum Wage

February 18, 2014



Every time momentum builds for lifting wages, conservative ideologues say it will cost jobs. Every time they’ve been dead wrong. Being consistently wrong and not caring about workers are the only two things conservative economists can be counted on for.



This is more of the same noise. They want subservient, scared workers whose suffering will expand their stock portfolios. Our country is finally poised to lift millions out of poverty and make our country work for the people who work. Let’s raise the wage and we’ll prove the CBO wrong again.

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[cstanleytech]

1. I still think though that the best long term solution to the pay gap is

to hit the companies like walmart where it hurts which is in their taxes so that the larger the gap between what their highest paid and lowest paid employee the more the company pays in taxes as well as they should be getting dinged if they have a high number of workers who only earn at or near the federal poverty level and are forced to rely on food stamps or welfare because walmart doesnt want to pay them a livable wage.

[jimmydwight]

2. The price of a Hamburger will go up regardless

of whether they raise minimum wages. They always have. Remember the 25 cent hamburger. Burger King now wants $4.75 for a whopper.

[clandestiny]

3. True. The cost of everything EXCEPT wages has gone up. Don't they ever wonder who's

going to buy their products when the only jobs are low wage and it takes every dime you make just to pay the bills?

[DallasNE]

5. Around 6 Months Ago

McDonald's increased the price of their "McDouble" sandwich from $1 to $1.19. That is nearly a 20% increase and I doubt it made a statistical difference in the sale of that sandwich. It probably reflects and is in anticipation of an increase in minimum wage. Still, expect them to add another dime to that price should a minimum wage increase become law and then take credit for swallowing a portion of the wage increase. Cry me a river.

[alp227]

6. True. Because cattle prices going up, am I wrong?

And because of the recent drought and ongoing climate change agriculture is getting more expensive as time goes by.

[DallasNE]

4. What Has Happened Over At CBO

Is there a new CBO chief that is dictating some dubious parameters that skew the results?

Here the CBO paints a pay increase as a lose-lose situation.

No one disputes that some jobs would go away as businesses could not pass along high enough prices to maintain high enough profit levels and would close down the business. Not a lot, but some. But nobody can dispute that low wage workers would spend nearly every dime of that extra income and this increased demand would create jobs and it makes more sense that more jobs would be created than lost but CBO says no. Look, we have gone through upteen minimum wage increase so there would be a plethora of good data to study, making best guesses like CBO used hard to understand. Why have they deviated from past practices at this point? But all studies have to be taken with a grain of salt because an increase in the minimum wage will not be a stand-alone event. For instance, a change in interest rates by the Fed could well mask the impact of an increase in the minimum wage.

To arrive at this net loss of jobs the CBO used 19% as the number of households currently living below the poverty level where 1 wage earner is currently working at minimum wage. The other 89% of households with 1 member making minimum wage are all above the poverty level? That number sounds wildly bogus. But if that number is higher then more of the money gets spent with the result being a net increase in jobs. So if a number is cooked the conclusion will be cooked. And that is what it looks like is going on here.

[alp227]

7. Well the CBO is non-partisan and not supposed to confirm Democrats' or Republicans' biases.

its current head Douglas Elmendorf became director during the Obama first term. The CBO has issued reports debunking Republican BS about Obamacare enough that right wingers will lie about CBO reports. you can find plenty of criticisms of CBO from both the left and the right.

[DallasNE]

8. I Have Long Touted CBO Reports

But this is about 3 in a row where the results are either poorly phrased or at odds with earlier estimates without explanation as to why.

Not more than a month ago CBO put out a report with an awkwardly worded headline on the ACA that said that the law would cause 200,000 jobs to be lost. But the detail painted a far different picture as it concluded that 200,000 people would choose to drop out of the labor market and impact the participation rate. In other words, those 200,000 jobs would be opened up for the unemployed while also creating some new jobs too.

Here the report basically claims that not enough people working minimum wage jobs are currently living below the poverty level for the increased spending to create demand in excess of people terminated due to now unprofitable work being discontinued. Indeed, one could conclude from this CBO report that cutting the minimum wage would result in an increase in jobs which would in turn support the notion that jobs would be created by eliminating the minimum wage and allow the market to determine the minimum wage -- which is exactly what has happened in Vietnam.