CBO: $15 minimum wage would lose 1.4 million jobs

Raising the federal minimum wage to $15 an hour would kill 1.4 million jobs, the Congressional Budget Office said in a new analysis Monday that severely complicates President Biden’s demand for a wage hike in any new coronavirus relief bill.

CBO said job losses would grow each year from implementation, and by 2025 there would be 1.4 million fewer people holding employment than there would be without the federal action. Half of those will have dropped out of the labor force altogether, the analysts said.

“Young, less educated people would account for a disproportionate share of those reductions in employment,” CBO said.

But the flip side is that 900,000 fewer people would be living in poverty, CBO said.

The analysis said 17 million people who currently are anticipated to be working for less than $15 in 2025 would see a raise, and another 10 million with pay just above the $15 level would also be affected.

The agency was analyzing a bill sponsored by Sen. Bernard Sanders, Vermont independent, who serves as Democrats’ chair of the Senate Budget Committee and who is working to try to insert the $15 standard into the coronavirus bill he’s now working on.

His legislation calls for a phase-in of the higher wage rate, reaching the $15 level by 2025, and then automatically adjust it higher in future years, based on inflation.

The plan, in addition to hurting jobs, would also sock taxpayers with $54 billion in new deficits over the next decade, since the federal government would have to pay more for goods and services, particularly in health care. That would outpace savings from welfare programs that people would no longer qualify for, CBO said.

The analysis is in line with CBO’s previous work, which has found that a small increase in the federal minimum wage, currently set at $7.25 an hour, would not be painful, but a large increase would sap jobs.

Many states have a higher wage, and the District of Columbia set its minimum wage at $15.

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